The November Budget 2025 brought significant updates to the EMI scheme, including raised eligibility thresholds and administrative changes. This article explores the implications for early-stage and scale-up companies.

Published 28 November 2025

Introduction

The UK’s Autumn Budget, delivered on 26th November 2025, brought significant updates to the Enterprise Management Incentive (EMI) scheme - a government-backed employee share scheme popular among growing companies. These changes, including raised eligibility thresholds and the planned removal of EMI notifications, mark a pivotal shift in how ambitious early-stage and scale-up businesses can incentivise talent and foster growth. This article explores the implications of these reforms, offering practical insights for business leaders keen to harness the power of EMI.

What is EMI?

EMI is a share option scheme designed to help smaller, high-growth businesses attract and retain top-performing employees. By granting employees the option to buy shares at a fixed price, EMI aligns employee interests with company success - boosting motivation, loyalty, and a focus on growing value.

EMI stands out from other equity incentive arrangements for its flexibility, tax advantages and general ease of implementation. There is no income tax liability on grant of the EMI option, and generally no income tax liability on exercise provided the exercise price is at least equal to market value of the shares at grant and provided it remains an EMI qualifying option.

Key changes announced

The recent Budget introduced several headline changes to the EMI regime:

1. Raised eligibility thresholds for EMI qualifying companies:

o From April 2026:

• the gross assets limit will increase from £30 million to £120 million
• the maximum number of employees will increase from 250 to 500
• the company options value limit will increase from £3 million to £6 million
• the maximum life of an EMI option will increase from 10 years to 15 years

o This means more businesses that might have previously outgrown EMI, should now consider whether they should implement a new EMI scheme, or continue operating an existing scheme.

o The doubling of the company value limit should also encourage businesses to consider whether it is appropriate to widen the pool of employees that participate in the EMI scheme – historically this was typically limited to the senior executives, but with the new increased limit, an EMI scheme for the entire workforce (possibly on simplified terms to ease administration) could be very effective.

2. Scrapping of EMI Notifications: The requirement to notify HMRC of granting EMI options will be abolished from April 2027. This streamlines compliance, removes a common administrative pitfall, and reduces the risk of companies inadvertently losing valuable EMI tax benefits due to missed deadlines.

Expert insight

Dan Sharman, our Incentives partner, welcomes these changes:

“As a share schemes advisor, I feel like Christmas has come early with the news that the EMI eligibility thresholds will rise and in particular that EMI notifications will be scrapped from April 2027. These notifications (or the lack of them) cause major headaches on corporate transactions, and I have always thought it unfair that option holders are the ones to lose out on generous tax advantages as a consequence of either the employer’s failure to make the correct filings to HMRC, or a failure with the system in not being able to look back at what has been notified historically. These changes will simplify the EMI regime and ensure EMI option holders get the tax advantages they are entitled to.

The increased eligibility thresholds are significant and will help enable high-growth companies to continue to properly incentivise managers and their wider workforce as they scale, without needing to consider alternative incentive arrangements which are either more costly to administer or more restrictive (which effectively penalised companies that were successful).

Looking at the bigger picture, it’s very promising that we’ve now had successive budgets which have enhanced equity incentives in some way, e.g. expanding CSOP eligibility and relaxing technical requirements for EMI options. This shows the importance successive governments have placed on employee share schemes and the positive impact these schemes have on individual companies and the UK economy as a whole.”

Government support for employee share schemes and beyond

With a focus on scaling innovation and supporting entrepreneurial growth, the expanded EMI regime underscores the government’s commitment to helping businesses align employees’ interests with investors and other shareholders. Another example of this is the ability to amend EMI and CSOP contracts to trigger option exercise on a private intermittent capital and securities exchange (PISCES) event, providing a new type of liquidity for shareholders.

On the same day as the Budget, the government also published a policy paper on Entrepreneurship in the UK focussing on its proposed actions to support scaling businesses. Our team will be responding to this paper with our insights on their plans for EMI, as well as other tax advantaged schemes Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT).

Conclusion

We welcome the Budget changes to EMI schemes as they will be more inclusive and less administratively burdensome, enabling more SMEs and scaling companies to reward and retain top talent. For business leaders, now is the time to review your incentives plans, assess eligibility under the new thresholds and consider how EMI could support your growth ambitions, a choice that is now more accessible than ever.

Please contact Dan Sharman for more information at Dan.Sharman@shoosmiths.com.