EMI reform 2026: What mid‑market and scale‑ups need to know

The changing incentive landscape

EMI schemes have long been one of the most effective incentives for attracting, retaining and motivating talent in high‑growth businesses. Their tax efficiency, flexibility and close alignment to long‑term value creation mean they are often the cornerstone of remuneration strategies in founder‑led and rapidly scaling companies. With realised value subject to Capital Gains Tax, EMI awards have been an especially attractive means for employers to deliver competitive remuneration packages without leaning on cash resources alone.

Until now, this valuable incentive arrangement has been limited to smaller companies and thresholds were regularly exceeded before the business realised the full value of the arrangement. This led to businesses transitioning to less flexible or more complex schemes which diluted their ability to reward employees and created inconsistencies for later joiners.This placed scaling companies in a difficult position, particularly at the stage where retaining experienced teams and attracting specialist talent was vital for expansion.

The Autumn Budget 2025 signalled a major shift. From April 2026, the UK Government will significantly expand access to EMI and simplify ongoing administration. These changes are designed to make the EMI scheme more accessible, provide greater flexibility and, overall, an even more essential offering, particularly for growing businesses looking to attract and retain top talent.

Market context: why EMI reform matters for growth‑focused businesses

As businesses scale, the ability to offer meaningful equity is a decisive factor in attracting and retaining senior talent. This welcome extension of the scheme will mean that EMI tax-advantaged options will now be available to more businesses looking to incentivise, attract and retain talent than ever before.  Crucially, this will include those pioneering and increasingly innovative small and medium-sized enterprises (SMEs) whose rapid growth would otherwise have seen them miss out. 

From 6 April 2026, several key reforms take effect:

• employee limit doubled: The maximum ‘employee limit’ for eligibility under the EMI scheme will increase from 250 to 500.
• gross assets threshold quadrupled: the ‘gross assets’ limit has increased from £30 million to £120 million.
• company share option pool increased: the limit on the total value of shares (valued at grant not exit) that can be awarded by a company under an EMI option plan will double to £6 million. This allows businesses to open up participation in the company scheme to a greater number of employees.
• exercise window extended: the ‘long stop’ date attaching to EMI options will increase, from 10 years to 15 years from the date of grant. This longer window provides greater flexibility, potentially allowing for enhanced growth in value for employees.
• compliance simplified: from April 2027, the requirement to notify HMRC about EMI options will be removed. This simplification will undoubtedly reduce the administrative burden, by streamlining the filing requirements for employers operating an EMI.

These changes broaden eligibility, simplify compliance and offer greater flexibility for employees and employers. Rapidly scaling organisations and high‑growth SMEs stand to benefit significantly under the updated regime.

Looking forward: succession, exit pathways and the post-EMI landscape

EMI schemes sit at the heart of long‑term ownership and succession planning. As management teams prepare for exit events such as trade sales, secondary buyouts, MBOs or employee‑ownership structures, the alignment created between stakeholders and employees through EMI is a powerful driver of value.

As businesses and option holders move into the post‑EMI landscape, it is important for them to consider how individuals will crystallise value and what this means for their personal tax position, liquidity and longer‑term wealth planning. Reinvestment strategies, as well as the design of successor incentive arrangements, become essential to maintaining continuity and stability beyond the initial EMI cycle.

Beyond the mechanics of the deal, a broader perspective is essential. It is critical to address the financial, tax, and personal implications for founders, management shareholders, and investors, ensuring clarity on outcomes, effective liquidity planning, and appropriate timing of key decisions. These factors are fundamental to the successful implementation of EMI schemes.

Looking ahead, understanding regulatory change and adopting a forward‑looking approach, scenario planning, and proactive recommendations is important to stay ahead of the market, protect value and support strategic growth.

Conclusion

The upcoming changes offer a substantial opportunity for growing mid‑market companies. By expanding eligibility and reducing administrative burden, EMI remains an influential tool for talent retention and long-term value creation.

Now is the time for leaders to review their incentive structures and ensure they are making full use of the expanded regime.

For further guidance on the changes and how they can support your business, get in touch with our Reward Advisory Services specialists.