Tax

Among other changes announced as part of the UK Autumn Budget 2025, Rachel Reeves, the Chancellor of the Exchequer, announced that some of the limits that restrict the availability of the Enterprise Management Incentive (“EMI”) share option regime will be relaxed from 6 April 2026:

1. the cap on the aggregate value of shares under option (measured at grant across all option holders) will double to £6 million;
2. the cap on the gross assets of the company will quadruple to £120 million;
3. the cap on the number of employees will double to 500; and
4. the maximum period between grant and exercise of the EMI option will extend from 10 to 15 years (this change will have retrospective effect, allowing the amendment of existing EMI options to provide for the longer exercise period without jeopardising the tax advantages).

In addition, from 6 April 2027, failure to notify HMRC that an EMI option has been granted will no longer result in loss of tax-advantages.

EMI options are the Government’s flagship employee equity incentive scheme originally designed to help start-ups and smaller companies attract and retain talent by offering tax-efficient share options. The amendments announced by Ms Reeves are a material expansion of the EMI regime, opening up its availability beyond start-ups to larger private companies and smaller public companies. These changes will be welcomed by business as employee share options operate to align employees’ interests with those of the wider shareholder base, incentivising them to work towards a successful exit.

However, the Government chose not to remove the requirement for the company to be independent (broadly, not under the control of another company). This means that employees of companies controlled by a financial sponsor remain excluded from participation.