What Changed for UK EMI Options From 6 April 2026: £120 Million Assets, £6 Million Cap
UK EMI share options now cover companies with fewer than 500 staff, up to £120 million in gross assets and a £6 million option cap. Here is how the rules work.
Enterprise Management Incentives (EMI) are a tax-advantaged share option scheme for UK companies. For EMI contracts granted on or after 6 April 2026, the limits that decide which companies can use the scheme have risen. Gross assets can now reach £120 million, the employee ceiling is fewer than 500, and the total value of unexercised options a company can hold is £6 million (£3 million for a Specified Company).
The changes also extend how long an option can run from grant to exercise, and they apply differently inside a group. Founders who hire staff in Britain also need to check the hours test that decides which employees can receive EMI options.
What Rose From 6 April 2026
HMRC's manual page on the 2026 changes lists three company limits for most companies. The gross assets limit rose from £30 million to £120 million. The employee limit rose from fewer than 250 to fewer than 500. The cap on the total market value of unexercised options rose from £3 million to £6 million.
These limits apply to EMI contracts granted on or after 6 April 2026. The government's policy paper on the change says the aim is to let scale-ups, not only start-ups, offer EMI schemes, so that staff can share in growth.
Options granted before that date remain under the £3 million cap, so a company with older grants may need to track two limits at once.
The £6 Million Option Cap and Specified Companies
The £6 million figure is the total unrestricted market value of shares under unexercised EMI options granted by a company. From 6 April 2026 that total must not exceed £6 million, or £3 million where the employer is a Specified Company.
A Specified Company is a Northern Ireland company with its registered office in Northern Ireland that carries on a trade in goods, or in electricity generation, transmission, distribution, supply, wholesale trade or cross-border exchange. The increased limits and the longer exercise period do not apply where the employer is such a company.
In a group, the limits apply to the group as a whole, but which limit applies depends on whether the employer company is a Specified Company. HMRC's example is a group with £40 million of gross assets. It cannot grant qualifying options to employees of a Specified Company, because the £30 million limit is exceeded. It can grant qualifying options to employees of a non-specified company, where the £120 million limit applies.
If options are granted on the same day to staff of both kinds and the £3 million limit would be exceeded, the Specified Company options are treated as granted first. The non-qualifying excess is then divided pro rata among the options granted that day.
Reading the 15-Year Exercise Period
The 15-year figure is the maximum period from grant to exercise. For new options granted by companies that qualify for the higher limits, the maximum qualifying exercise period rises from 10 years to 15 years.
Existing options that have not lapsed, expired or been exercised can be amended to allow up to 15 years from grant. To benefit, the option must be exercised on or after 6 April 2026. For most options the change can be made under the existing terms.
Fixed-date options need a written variation. HMRC's manual says the variation must be made on or after 26 November 2025 and on or before the 10th anniversary of grant. It must result in a single exercise date on or before the 15th anniversary.
“Higher limits do not apply on their own to every group company, so the employer company decides which limit applies.”
Who Can Receive Options: The Hours Test and Non-UK Employers
Employees must spend at least 25 hours a week on the EMI company's business. If they work fewer hours, they still qualify if at least 75% of their total working time is spent on that business. Leave counts toward total working time.
HMRC's worked example shows 20 company hours out of 30 total, which HMRC gives as 66%. That does not meet the 75% test, so the employee would not qualify.
For a company based outside the UK, a 2020 PKF note says a non-UK company can grant EMI options if it has a permanent establishment in the UK, which covers a UK branch or subsidiary. The note also says the trade need not be carried on wholly in the UK.
Founders with an overseas parent should confirm the employer-level position with HMRC before granting options to UK staff.
Registering and Notifying HMRC on Time
Before its first notification, a company must register with HMRC's PAYE online service and register the scheme under which the options are granted.
For grants made on or after 6 April 2024, HMRC says notification is due by 6 July after the end of the tax year of grant. Grants made before 6 April 2024 must be notified within 92 days of the grant date.
Applying that rule to the 2026/27 tax year, which ends on 5 April 2027, gives a notification date of 6 July 2027. Grants made in 2025/26 had a deadline of 6 July 2026, which has already passed.
If the company believes it has a reasonable excuse for missing the deadline, it should notify HMRC without unreasonable delay once the excuse ceases to exist, and explain all the relevant facts. HMRC issues a reasonable excuse code if it accepts the excuse, which lets the company file online. Where an employee benefit trust or another shareholder makes the grant, the employer must still notify HMRC.
