Last updated: 2 November 2026
EMI options are HMRC-approved tax-advantaged share options for qualifying smaller UK companies. From 6 April 2026, limits on company options, assets, employees and exercise periods increased, while Specified Companies were excluded.
What is an EMI option?
Enterprise Management Incentives (EMI) is an HMRC-approved tax-advantaged share option scheme for employees of qualifying smaller companies. If the exercise price is no less than the market value at the date of grant, there is no income tax or National Insurance charge on grant or exercise, and no employer National Insurance.
The scheme is aimed at smaller companies that meet the qualifying conditions. It can help align employees with the company’s growth, but it is not suitable for every business. Readers should check HMRC guidance or take advice before granting options.
What changed on 6 April 2026?
From 6 April 2026, the company options limit rose from £3 million to £6 million. The gross assets limit rose from £30 million to £120 million. The employee limit rose from fewer than 250 to fewer than 500. The exercise period for new options rose from up to 10 years to up to 15 years.
Existing options that had not lapsed, expired or been exercised can be amended to 15 years, if exercised on or after 6 April 2026. The increases do not apply to “Specified Companies”, meaning companies with a registered office in Northern Ireland and goods or electricity trades. Older third-party pages still show the earlier numbers, so always check GOV.UK; last checked 2 November 2026.
| Limit | Before 6 April 2026 | From 6 April 2026 |
|---|---|---|
| Company option limit | £3m | £6m |
| Gross assets | £30m | £120m |
| Employees | fewer than 250 | fewer than 500 |
| Exercise period | 10 years | 15 years |
Which companies and employees qualify?
The company must be independent, not a 50% subsidiary or controlled by another company. It must have a permanent establishment in the UK and must carry on a qualifying trade. Excluded activities include financial and banking activities, legal and accountancy services, property development and farming.
The employee must work at least 25 hours a week for the company or subsidiary, or, if less, 75% of working time. Employees owning more than 30% of the company cannot take part. The per-employee limit is £250,000 of unexercised options, per Saffery’s guide dated 31 March 2026. The HMRC page on the 2026 changes does not mention this limit changing.
How do you set up EMI options?
The practical steps are to check the company and employee conditions, agree the share value, grant options under a written agreement, then register the scheme online and notify HMRC of each grant. HMRC can agree a valuation before grant, giving more certainty on the exercise price.
Online registration of the scheme and notification are mandatory. For grants on or after 6 April 2024, notification is due by 6 July following the end of the tax year of the grant. For grants before that, the deadline was within 92 days. For example, an option granted on 15 May 2026, in tax year 2026-27, must be notified by 6 July 2027. Many older guides still say 92 days.
How are EMI options taxed?
If the exercise price is at or above market value at grant, there is no income tax or NIC at grant or exercise. On sale, gains are treated as capital gains. Saffery says employees can claim Business Asset Disposal Relief at a reduced 18% CGT rate from 6 April 2026, with a 24-month minimum holding period from the grant date.
Non-tax-advantaged options become taxable as income, with National Insurance, on exercise gains, often via PAYE. For example, an option over 10,000 shares at £2.00, equal to market value at grant, sold at £10.00 after exercise gives a gain of £80,000. At 18% CGT, if relief applies, that is £14,400. Rate and eligibility need checking with HMRC guidance or an adviser.
EMI vs unapproved options
EMI has no income tax or NIC at grant or exercise where the exercise price is at or above market value, with gains taxed as capital gains on sale. It also has conditions on the company and employee, and notification is required. Unapproved options have no company or employee conditions, but gains are taxed as income plus National Insurance.
Amending a share plan to allow exercise in a secondary sale may inadvertently void tax benefits. This is a practical risk for companies that later run secondary transactions or change plan terms.
Frequently asked questions
What is an EMI option?
An EMI option is an HMRC-approved tax-advantaged share option for employees of a qualifying smaller company. It can avoid income tax and National Insurance at grant and exercise if the exercise price is at least market value at grant.
What changed for EMI options on 6 April 2026?
The company option limit rose to £6 million, gross assets to £120 million, employees to fewer than 500, and the exercise period to 15 years. Specified Companies were excluded from the increases.
Who can receive EMI options?
Employees who work at least 25 hours a week, or 75% of working time if less, can qualify. Employees owning more than 30% of the company cannot take part.
How are EMI option gains taxed?
Gains are treated as capital gains on sale, and Business Asset Disposal Relief may apply at 18% CGT from 6 April 2026 after a 24-month holding period. Readers should check HMRC guidance or take advice.
What is the notification deadline for EMI grants?
For grants on or after 6 April 2024, notify HMRC by 6 July after the end of the tax year of grant. For example, a 15 May 2026 grant is due by 6 July 2027.
Sources
- HMRC manual: EMI limits from 6 April 2026
- GOV.UK: expanding the EMI eligibility limits
- HMRC manual: EMI notification
- Saffery: EMI complete guide
Figures and prices were checked on 2 November 2026; check the linked sources before relying on them. This article is general information, not tax, legal or investment advice.
