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Upcoming changes to EMI limits mean more companies likely to qualify

Changes to the thresholds contained in the EMI rules announced in the November 2025 Budget will come into effect shortly, on 6 April 2026. The effect of these changes is that some larger companies will be within (or back within) the EMI rules, meaning that they will be able to grant EMI options to their employees (either for the first time or once again).

Generally these changes are to be welcomed, as the tax advantages of EMI options make them the preferred choice of employee share incentives, where they are available. They compare favourably to CSOPs because the limits are so much higher (£250k per person for EMI versus £60k for CSOP), there is no minimum holding period to get CT treatment versus income tax and BADR is available to reduce the rate of CGT to 18% if the sale of shares is more than 2 years from the date of grant.

The changes to the limits are that a company can now have:

• Up to 500 employees (an increase from 250);
• Gross assets of up to £120 million (an increase from £30m); and
• Shares under option of up to £6 million (an increase from £3m).

For companies who already have an EMI share scheme in place, but have not been able to grant options under it recently as they exceeded the pre-6 April 2026 limits, these changes may be of interest as they could once again be able to grant EMI options to their employees. It is worth noting, however, that the limit on unexercised options which any individual can hold is staying at £250,000. It also opens up the possibility of granting EMI options to larger businesses who didn’t qualify under the previous limits.

An additional change is being made to the life span of an EMI option: it will be increasing to 15 years. This benefits both companies granting options for the first time as well as those with existing options in place, as HMRC has made clear that existing EMI options can be amended to benefit from the increased 15 year exercise period. We would of course suggest that any client considering amending the exercise period in their existing option contracts first takes tax advice, to ensure that it is done in a way that preserves EMI status (and we would be happy to advise on this).

For completeness, these increased limits will not apply to ‘specified Northern Ireland companies’ – broadly those companies which have their registered office in Northern Ireland, and whose trade involves either trading in goods, or in generating, distributing or trading in electricity.

Possible action points

• Clients with existing EMI options may wish to extend the exercise period – you could consider contacting them to explore this possibility, or alternatively you could leave the clients to raise it with you when they approach the expiry of their original ten year period

• Clients with existing EMI option schemes who outgrew the previous limits may now be able to grant EMI options again (subject to them still meeting the other qualifying conditions) – consider contacting them to see if they want to explore this

• Clients who have not previously granted EMI options may now qualify – perhaps start with a list of clients who have granted CSOP or unapproved employee options who might now qualify, and contact them to see if they would be interested in considering EMI options