Policy paper

Expanding the eligibility limits of the Enterprise Management Incentive scheme

Published 26 November 2025

Who is likely to be affected

Employers who offer the Enterprise Management Incentives (EMI) options to their employees.  

General description of the measure

The measure will amend provisions for some of the limits relating to the EMI scheme.

For eligible companies, the changes that will apply to EMI contracts granted on or after 6 April 2026 are the limit on:

• company options will be increased from £3 million to £6 million
• gross assets will be increased from £30 million to £120 million
• the number of employees will be increased from 250 employees to 500 employees

For eligible companies, the following change will apply to EMI contracts granted on or after 6 April 2026 and can also apply retrospectively to existing EMI contracts which have not already expired or been exercised. The limit on the exercise period will be increased from 10 years to 15 years. Existing contracts can be amended without losing the tax advantages the schemes offer, provided it is in line with the legislation.

Policy objective

The measure supports companies to incentivise and reward employees effectively by changing the EMI scheme rules to enable scale-ups to participate as well as start-ups. This will help align employer and employee interests together in the growth of companies.

This measure will enable larger companies and companies which are growing to offer tax-advantaged EMI schemes. This allows those companies to better reward their employees, which helps them to attract and retain high-calibre candidates. This change therefore helps private companies to continue to scale and grow.

Background to the measure

At Autumn Budget 2024, the government committed to creating a positive environment for entrepreneurship and working with leading entrepreneurs and venture capital firms to understand how policy supports that, including the role of the existing tax schemes.

This measure supports the government’s objective of making the tax system more competitive, ensuring the tax system keeps pace with innovation in the wider economy. The measure is part of the government’s wider package to strengthen the support for UK entrepreneurs, start-ups and scale-ups, which are key in achieving economic growth.

Detailed proposal

Operative date

The measure will take effect from 6 April 2026. This means that EMI contracts granted on or after this date are subject to the changes outlined in this measure. The change to the maximum exercise period can also be applicable to existing contracts retrospectively.

Current law

This measure will amend current law governing EMI. It is found in part 7 and schedule 5 of ITEPA 2003.

Proposed revisions

Legislation will be introduced in Finance Bill 2025-26 to modify Schedule 5 to ITEPA 2003 as follows.

Paragraphs 7, 12, 12A and 36 will be amended. This will serve to amend the limits relating to the:

• maximum value of options in respect of a relevant company’s shares
• gross assets requirement
• the number of employees requirement
• option to be capable of exercise within the specified period

The revision to the exercise period will also have retrospective effect.

Paragraph 57F will be introduced. This will define a specified Northern Ireland (NI) company for the purposes of the EMI code. The existing limits, in paragraphs 7, 12, 12A and 36, will be retained for a specified NI company.

Summary of impacts

Exchequer impact (£ million)

2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031
0	-70	-230	-410	-585	-695

These figures are set out in table 4.1 of Budget 2025 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2025.

Macroeconomic impact

This measure is not expected to have any significant macroeconomic impacts.

Impact on individuals, households and families

This measure will primarily impact employees working for companies who are or will be participating in EMI. The changes will mean that larger companies will be able to administer the EMI scheme.

This measure is not expected to impact on family formation, stability or breakdown.

These changes are expected overall to have no impact on individuals’ experience of dealing with HMRC, as the changes do not change any processes or tax administration obligations for them. In addition, employees are not responsible for providing annual reports through the Employment Related Securities return.

Equalities impacts

The change to expand eligibility and limits of EMI scheme will affect all individuals who are or become eligible for them.

HMRC does not currently hold data on the protected characteristics of individuals impacted by this measure and so cannot make an assessment of the impacts on those with shared protected characteristics.

Administrative impact on business including civil society organisations

According to HMRC’s latest published statistics for the tax year 2023 to 2024, there were 5,200 companies who granted EMI options to their employees.  

This measure will impact companies eligible in the United Kingdom except where companies are registered in Northern Ireland and trade in goods or electricity, due to the UK’s international subsidy control agreements.

This measure will allow larger companies to access the benefits of the scheme. It is expected to have a negligible administrative impact on companies who will need to consider the new increased limits. Businesses will need to keep information for longer due to the increase in the exercise period, which allows more time for exercise and meeting the criteria to benefit from tax advantages.

There is likely to be a one-off cost of familiarisation, training and upskilling, and legal costs in administering EMI schemes. There are not expected to be any continuing costs.

This change is expected overall to have minimal impact on businesses’ experience of dealing with HMRC, as the change does not change any processes or tax administration obligations besides companies identifying their registered office and, if appropriate, trade. Whilst employers do have to report annually using the employment related securities online service, the changes will not affect the way employers report to HMRC, nor will they be required to provide more information aside from their registered office. 

This measure is not expected to impact civil society organisations. 

Operational impact (£ million) (HMRC or other)

The proposals will require HMRC to make IT changes, estimated to cost in the region of £1.8 million, to support delivery and implementation of this policy. Employers and agents will see small changes to the EMI notification journey. This will involve identifying their registered office.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

Consideration will be given to monitoring and evaluating aspects of the policy after two years of monitoring data have been analysed and collected.

Further advice

If you have any questions about this change, email employmentincomepolicy@hmrc.gov.uk.