Enterprise Management Incentives (EMI) let qualifying UK companies grant employees options over shares worth up to £250,000 each, valued at grant. From 6 April 2026 the company limit on unexercised options rose from £3 million to £6 million, the gross assets limit from £30 million to £120 million, and the headcount limit from fewer than 250 to fewer than 500 full-time equivalent employees. If the exercise price is at least market value at grant, there is no Income Tax or NIC on exercise.
How do EMI share options work?
An EMI option gives an employee the right to buy shares in their employer at a price fixed when the option is granted, usually by reference to a market value agreed with HMRC. When the option vests or an exit happens, the employee pays that price and receives the shares.
The attraction is the tax treatment. Growth in value between grant and exercise is not taxed as employment income if the rules are met, which makes EMI the most generous of the tax advantaged schemes. For the wider rules on shares acquired through a job, see our guide to employment related securities.
What is the EMI option limit?
- Per employee: options over shares worth up to £250,000, measured at market value on the date of grant. Unexercised CSOP options count towards the same limit. Once an employee reaches it, no further EMI options can be granted to them until three years after the last grant.
- Per company: total unexercised EMI options are capped at £6 million for options granted from 6 April 2026, up from £3 million.
Which companies qualify for EMI from 6 April 2026?
The company tests are applied on the day the options are granted.
| Test | Options granted before 6 April 2026 | Options granted from 6 April 2026 |
|---|---|---|
| Total unexercised options | £3 million | £6 million |
| Gross assets | £30 million or less | £120 million or less |
| Employees | Fewer than 250 full-time equivalent | Fewer than 500 full-time equivalent |
| Maximum exercise period | 10 years from grant | 15 years from grant |
For a group, the gross assets and employee tests apply to the group as a whole. A small category of Northern Ireland companies trading in goods or electricity keep the old £30 million and 250 employee thresholds.
The company must also meet these conditions:
- Independence: it cannot be a 51% subsidiary of another company or under another company’s control, and no arrangements can exist under which it could become so. A company owned by an employee ownership trust can still qualify.
- Qualifying trade: it must carry on a qualifying trade, or head a trading group, and have a UK permanent establishment.
- No excluded activities: the trade cannot consist substantially of excluded activities. These include dealing in land, shares or commodities; banking, insurance and other financial activities; leasing; royalties and licence fees; legal or accountancy services; property development; farming; forestry; shipbuilding, coal and steel; and running hotels, nursing homes or care homes.
Who can be granted EMI options?
The option holder must be an employee working at least 25 hours a week for the company or, if less, at least 75% of their total working time. Anyone who owns or controls more than 30% of the company’s ordinary share capital cannot be granted EMI options.
Do you pay tax when you exercise EMI options?
There is no Income Tax or National Insurance on the grant of a qualifying EMI option. There is also none on exercise, provided the employee pays at least the market value the shares had at grant, exercises within the permitted period and there has been no disqualifying event.
If the option was granted at a discount, Income Tax is charged on exercise on the difference between the price paid and the market value at grant. Growth after grant still escapes Income Tax.
How are EMI shares taxed when you sell them?
Capital Gains Tax applies to the gain on sale. The base cost is the price paid for the shares plus any amount paid for the option and any Income Tax charged on exercise. See our page on Capital Gains Tax rates for current rates.
EMI shares have an easier route into Business Asset Disposal Relief. The usual 5% shareholding test does not apply. Instead, the option must have been granted at least two years before the sale, and the holder must have been an employee or officer throughout that period. The clock starts at grant, not exercise, so an employee who exercises on a sale can still qualify. The BADR rate is 14% for disposals between 6 April 2025 and 5 April 2026, and 18% from 6 April 2026.
What happens to EMI options if you leave?
Ceasing to be an eligible employee, for example by leaving or falling below the working time commitment, is a disqualifying event. So are the company losing its independence and certain changes to the option terms or share capital. Exercising within 90 days of the disqualifying event preserves the tax advantages; after that, a tax charge can arise on exercise. Whether a leaver can exercise at all depends on the option agreement.
When must a company notify HMRC about EMI options?
For options granted on or after 6 April 2024, the company must notify HMRC online by 6 July following the end of the tax year of grant. Options granted before then had to be notified within 92 days. Missing the deadline means the options lose their tax advantages.
EMI vs unapproved options: what is the difference?
Unapproved options have no size, headcount or trade restrictions, so companies that fail the EMI tests often use them. The cost is tax: Income Tax is normally charged on exercise on the difference between market value at exercise and the price paid, with NIC too where the shares are readily convertible assets. With EMI, that growth is usually taxed only as a capital gain on sale.
Frequently asked questions
Can EMI options be exercised after 10 years?
Options granted from 6 April 2026 can run for up to 15 years. Existing options can be amended to allow 15 years if they have not expired or been exercised, as long as the exercise date is not brought forward.
Does the company need HMRC approval to grant EMI options?
No, but many companies ask HMRC for advance assurance that they qualify and agree the share valuation before granting.
What if HMRC questions your EMI scheme?
Valuations, qualifying trade status and notification dates are common areas for HMRC enquiries, and defending them takes accountant’s time. Solar Protect tax investigation insurance covers up to £100,000 of accountant’s fees with no excess if HMRC opens an enquiry. Get a quote to see what it would cost.
Reviewed by Matthew Bartlett, Director, Solar Protect. Last reviewed 29 September 2026. This guide is general information, not personalised tax or financial advice. Figures are correct for the 2025/26 and 2026/27 UK tax years at the time of writing.