The Enterprise Management Incentive (EMI) scheme has been open since 6 April 2026 to qualifying companies with fewer than 500 employees and up to £120 million of gross assets. HMRC has now announced a second round of changes to EMI and the Company Share Option Plan (CSOP), due to take effect from 6 April 2027.
The first round widened eligibility and extended how long options can run. HMRC’s policy paper of 28 October 2026, published alongside the Autumn Budget 2026, proposes a longer exercise window after a disqualifying event, a wider exception for companies moving to employee ownership, and a doubling of the CSOP individual limit. These 2027 measures are announced rather than enacted, and depend on legislation in Finance Bill 2026–27.
For owner-managed and growing businesses across Manchester, Liverpool and the wider North West, the changes could open new ways to attract and retain key employees, particularly ahead of a funding round, a succession or an exit. They may be especially relevant to scaling technology and software and digital and creative businesses. This article explains what has already changed, what is proposed for 2027 and what businesses should consider now.
What changed on 6 April 2026
Four EMI limits increased for options granted on or after 6 April 2026, according to HMRC’s policy paper on expanding the EMI eligibility limits.
| Limit | Before 6 April 2026 | From 6 April 2026 |
| Gross assets of the company | £30 million | £120 million |
| Number of employees | Fewer than 250 | Fewer than 500 |
| Total value of unexercised company EMI options | £3 million | £6 million |
| Maximum exercise period | 10 years | 15 years |
A company with 300 employees and £50 million of gross assets would previously have exceeded both thresholds. It may now qualify, provided it meets the scheme’s other requirements. The £250,000 individual limit per employee is unchanged.
Meeting the size thresholds does not make a company eligible by itself. The qualifying trade, independence, group structure and other statutory conditions still apply, and certain activities remain excluded, including legal and accountancy services. Not every professional services business will therefore qualify, even within the higher thresholds.
Existing EMI options may also benefit
The longer exercise period is the one change that can reach existing options. HMRC’s paper states that it can apply to existing EMI contracts that have not already expired or been exercised, and that eligible agreements can be amended without losing their tax advantages, provided the amendment follows the legislation.
The legislation sets out how the period can be varied for fixed-date options, so the extension should not be assumed to apply automatically. Each agreement needs reviewing, particularly those nearing their original 10-year expiry. For a company whose first options were granted around 2016, that review is time-sensitive.
Two further points
- Northern Ireland: companies with a registered office in Northern Ireland that trade in goods or electricity remain subject to the previous limits because of the UK’s international subsidy control commitments.
- PISCES: the government has confirmed that EMI and CSOP contracts granted before 6 April 2028 can be amended to treat a sale on a PISCES platform as an exercise event without losing their tax advantages, subject to the relevant conditions, as Lewis Silkin’s Budget 2025 analysis explains. That may give employees a route to liquidity through the new private share trading framework.
What is changing for EMI from 6 April 2027
HMRC’s 28 October 2026 paper proposes two changes to EMI itself, and a third change to the reporting of grants was announced earlier. All three take effect from 6 April 2027, and the first two need legislation in Finance Bill 2026–27.
A 180-day exercise window after a disqualifying event
Under the current rules, option holders have 90 days after a disqualifying event to exercise and keep the favourable EMI income tax treatment. From 6 April 2027 that period is expected to double to 180 days.
A disqualifying event is a change that affects an option’s EMI status, such as the company ceasing to meet a scheme condition or the employee no longer meeting the working time requirement. The extra time gives employees longer to consider their position and arrange funding for the exercise.
The 180 days governs the tax treatment, not the option’s contractual life. An option may remain exercisable afterwards depending on its terms, but different tax consequences may arise.
The change is expected to cover existing agreements as well as new grants, provided the event occurs on or after 6 April 2027. HMRC estimates that around 950 employees will benefit between 2027–28 and 2031–32. For businesses preparing a sale or restructuring, the longer window adds useful room.
A wider exception for companies moving to employee ownership
EMI requires a company to meet an independence test, and an existing exception covers companies controlled by employee ownership trusts (EOTs). From 6 April 2027 the government proposes to extend it to companies that have arrangements in place to become EOT-controlled. HMRC’s paper says companies making those arrangements on or after that date can continue to grant qualifying EMI options.
For founders preparing an EOT sale, that could make it easier to keep or introduce employee options while the transaction is prepared. It does not mean every EOT transaction or hybrid structure will qualify. The EOT control requirements, the EMI conditions and the proposed structure all need testing. Timing also matters, because the extension is tied to arrangements made on or after 6 April 2027.
Separate EMI grant notifications will be removed
For EMI options granted on or after 6 April 2027, companies will no longer send HMRC a separate notification of the grant. Grants will be reported through the EMI end-of-year return instead, starting with the 2027–28 return, which can be submitted from 6 April 2028 and is due by 6 July 2028, as HMRC’s Employment-Related Securities Bulletin 68 confirms.
Scheme registration, declarations and annual reporting still apply. For options granted before 6 April 2027 the existing rules continue, so grants made in 2026–27 must still be notified by 6 July 2027.
CSOP changes and the move to EMI2
The CSOP individual limit doubles from £60,000 to £120,000 for options granted on or after 6 April 2027, and HMRC’s paper says CSOP will now be referred to as EMI2. The government presents it as a complement to EMI and a follow-on scheme for companies that have outgrown EMI.
| Measure | Currently | From 6 April 2027 (proposed) |
| Individual CSOP option limit | £60,000 | £120,000 |
| CSOP options counted towards the EMI individual limit | Yes | No |
| Maximum CSOP exercise period | 10 years | 15 years |
| Period for certain third-party reserved options to stay outside the disguised remuneration rules | 10 years | 15 years |
A higher limit, and EMI and CSOP side by side
The doubled limit allows larger tax-advantaged awards, which could make CSOP more attractive to businesses that have outgrown EMI. CSOP options currently reduce an employee’s EMI allowance, and from April 2027 that interaction is due to end. Subject to eligibility, employees could hold EMI and CSOP options together, each within its own limit, which gives companies more room when designing packages for senior staff.
Longer exercise periods
The maximum CSOP exercise period rises from 10 to 15 years, and the period for certain third-party reserved options to stay outside the disguised remuneration rules also rises to 15 years. Existing CSOP agreements can be amended to take the longer period without losing their tax advantages, provided the legislative requirements are met. Amendments should wait until the legislation is available.
How many businesses could benefit?
HMRC’s figures give some scale. Around 390 companies granted CSOP options in 2024–25, against around 4,840 granting EMI options. HMRC expects roughly 36,000 employees and 380 companies to benefit from the higher CSOP limit and its separation from EMI between 2027–28 and 2031–32, and around 6,000 employees to benefit from the longer exercise period.
How EMI fits alongside an employee ownership trust
An EOT holds a controlling interest in a company for the benefit of its employees collectively, whereas EMI lets selected employees acquire shares personally through tax-advantaged options. The two can operate together. A founder might transfer control to an EOT while giving senior employees the chance to build individual minority holdings, a hybrid that supports succession and recognises key people.
Such arrangements need careful structuring. The EOT must keep meeting the controlling interest and other statutory requirements, while any EMI arrangements must independently satisfy their own conditions. The April 2027 change may make the transition easier, but it does not remove the need for detailed tax and legal advice.
The aims of each route also differ. EMI gives employees a personal stake in future growth without a change of control, whereas an EOT is designed to move control into collective employee ownership. The right choice depends on the ownership structure, succession objectives and longer-term plans. Our guide to employee ownership trusts, structuring options, tax and costs sets out the structures and the considerations for sellers and trustees.
Key dates for EMI and CSOP changes
The timetable below separates changes already in force from those still awaiting legislation.
| Date | Change | Status |
| 6 April 2026 | Higher EMI financial and employee thresholds and 15-year maximum exercise period | In force |
| 6 April 2027 | EMI exercise window after a disqualifying event increases to 180 days | Proposed |
| 6 April 2027 | EMI independence exception extended to companies transitioning to EOT ownership | Proposed |
| 6 April 2027 | CSOP individual limit increases to £120,000 and maximum exercise period to 15 years | Proposed |
| 6 April 2027 | Separate EMI grant notifications removed for new grants | Planned, subject to legislation |
| 6 July 2027 | Deadline for notifying EMI options granted during 2026–27 | Existing requirement |
| 6 April 2028 | First EMI annual return including grant details can be submitted | Planned |
| 6 July 2028 | Deadline for the 2027–28 EMI annual return | Planned |
What should businesses do now?
Some changes do not take effect until April 2027, but there are steps businesses can take now.
- Reassess EMI eligibility. Companies previously excluded on headcount or gross assets should retest against the new thresholds, alongside the qualifying trade, independence and group conditions. Businesses in excluded sectors should not assume the higher thresholds open EMI to them.
- Review existing option agreements. Check EMI options nearing their 10-year expiry to see whether they can take the 15-year period, and take advice before amending so that tax advantages are preserved.
- Consider an HMRC-agreed share valuation. The individual and company-wide option limits are tested against the unrestricted market value of the shares at grant, while granting options at a discount to actual market value can create an income tax charge on exercise. Agreeing a valuation with HMRC is voluntary, but doing so before the grant gives greater certainty and reduces the risk of a later dispute.
- Review whether CSOP suits. Businesses that have outgrown EMI, or want to add incentives for senior employees, should consider whether CSOP could form part of their remuneration strategy, particularly once the £120,000 limit applies.
- Prepare for the reporting changes. Keep complying with the notification rules for grants before 6 April 2027, and prepare to report new grants through the annual return. Registration, declarations and annual returns remain.
- Plan for longer record keeping. Longer exercise periods mean holding option agreements, valuations, grant records and supporting tax documentation for longer.
- Coordinate with transaction planning. Where an EOT sale, trade sale or funding round is possible, review share arrangements alongside the transaction timetable, since a transaction could trigger a disqualifying event or affect EMI eligibility. The lifetime limit for Business Asset Disposal Relief also halves to £500,000 for disposals from 6 April 2027, which is relevant to option holders planning an exit.
Frequently asked questions about the EMI changes
Are the April 2027 changes certain?
No. The government has announced them, but they are not yet law. HMRC says the legislation will be introduced in Finance Bill 2026–27, and the detail may change before it is enacted.
Can a company with 400 employees now grant EMI options?
Potentially. A company with 400 employees is no longer excluded on headcount alone, but it must still meet the gross assets limit, the qualifying trade test, the independence requirement and the other EMI conditions.
Do the new EMI limits help options already granted?
The higher financial and employee thresholds apply to options granted on or after 6 April 2026. The 15-year exercise period is the exception, because it can reach existing agreements that have not expired or been exercised. Existing agreements should be reviewed before any amendment.
What does the 180-day exercise window mean?
From 6 April 2027, option holders are expected to have 180 days rather than 90 after a disqualifying event to exercise and keep favourable EMI income tax treatment. It is intended to cover existing agreements where the event occurs on or after that date. The option’s contractual terms still decide whether and when it can be exercised.
Is CSOP changing its name?
HMRC’s paper says CSOP will now be referred to as EMI2. The rules themselves sit in Schedule 4 to the Income Tax (Earnings and Pensions) Act 2003, which Finance Bill 2026–27 will amend.
Does an employee ownership trust prevent a company from offering EMI options?
Not necessarily. An existing exception to the independence requirement covers companies controlled by EOTs, and the government proposes to extend it from April 2027 to companies arranging to become EOT-controlled. The EOT structure and the EMI arrangements must each satisfy their own conditions.
Does a company have to agree its EMI share valuation with HMRC?
No. An HMRC-agreed valuation is voluntary, but agreeing one before options are granted gives greater certainty about the share value used and reduces the risk of a later dispute.
Speak to our tax team
The expansion of EMI and the proposed CSOP reforms give growing businesses reason to revisit how they attract, retain and reward key employees. Choosing the right scheme takes more than checking the headline thresholds. Share valuations, existing option agreements, qualifying trading activities and changes of ownership can all affect the tax treatment and suitability of an arrangement.
Could your business now qualify for EMI under the expanded rules? UHY Williamson Croft’s tax team advises owner-managed and growing businesses across Manchester, Liverpool and the wider North West on employee share schemes, EMI and CSOP eligibility, share valuations and succession planning. Where a funding round, business sale or employee ownership transaction is being considered, our Transaction Services team can support the valuation and transaction planning alongside.
To discuss whether EMI or CSOP could suit your business, contact Taylor Rogers as below, or complete our contact form, or call 0161 399 0121 (Manchester) or 0151 303 3112 (Liverpool).
Sources
This article reflects the position at 29 October 2026.
- HMRC, Changes to employee share schemes, including Company Share Option Plan and Enterprise Management Incentives (28 October 2026)
- HMRC, Expanding the eligibility limits of the Enterprise Management Incentive scheme (updated 23 January 2026)
- HMRC, Employee Tax Advantaged Share Scheme User Manual: excluded activities, providing legal or accountancy services
- Osborne Clarke, EMI options: notification process set to change from next tax year (17 September 2026)
- Lewis Silkin, Significant expansions to the UK’s EMI option regime apply from 6 April 2026 (updated 31 July 2026)
This article reflects the law and HMRC announcements at the date above and is provided for general information only. The 2027 measures described are proposals that depend on legislation in Finance Bill 2026–27 and may change. It does not constitute tax, legal, financial or other professional advice and should not be relied on as a substitute for advice tailored to your circumstances. UHY Williamson Croft accepts no liability for loss arising from reliance on it. Please contact us before taking any action.