From 6^th April 2026, the government expanded the eligibility limits for the UK’s Enterprise Management Incentive (EMI) scheme. These changes mean that many more growing businesses will be able to use EMI share options as part of their employee incentive strategy.

EMI schemes allow companies to grant selected employees options to acquire shares in the future, usually linked to growth or performance milestones. When structured correctly, the increase in value between the option grant and the eventual sale of the shares is typically taxed as a capital gain rather than employment income, making it one of the most tax-efficient share incentive arrangements available in the UK.

 What’s changing from April 2026

The reforms introduced by the government significantly increase the size of companies that can operate EMI schemes. From 6^th April 2026:

• The gross asset limit (i.e., the limit on the total value of the company’s assets as shown on its balance sheet) will increase from £30m to £120m
• The employee limit will increase from 250 to 500 full-time equivalent employees
• The maximum value of company options will increase from £3m to £6m
• The maximum exercise period for options will increase from 10 years to 15 years

In practice, this means many businesses that have outgrown the current EMI thresholds may now become eligible.

 EMI scheme: a useful tool alongside employee ownership

For businesses exploring employee ownership, EMI schemes can play an important complementary role.

Employee Ownership Trusts (EOTs) create  stable, long-term ownership structures where the business is held by the EOT on behalf of all employees, but many employee-owned businesses also want ways to recognise and incentivise key individuals or leadership teams, which is where an EMI scheme can fit into the structure.

EMI options can sit alongside an employee ownership structure to:

• reward individuals who take on significant responsibility for growth;
• align leadership incentives with the long-term success of the employee-owned company; and
• in certain scenarios, incentivise leadership during a debt-repayment period after an initial sale to an EOT.

 A good moment to review incentives

For companies that are growing or approaching the previous EMI thresholds, the new rules may open up opportunities to introduce share options for the first time. For existing employee-owned businesses, it may also be a good moment to review how leadership incentives fit alongside the broader ownership structure.

When designed carefully, share incentives and employee ownership are not competing approaches. Instead, they can reinforce each other — helping businesses build strong ownership cultures while ensuring the people leading the organisation remain invested in its long-term success.

How Baxendale Employee Ownership can help

The April 2026 changes to EMI open up new opportunities for growing and employee-owned businesses — but only if schemes are structured carefully and aligned with your wider ownership goals.

If you’re considering employee ownership, reviewing leadership incentives, or wondering whether EMI could now work for your business, get in touch with us or call us on 020 3598 9982.