TAX PLANNING
EMI Share Options Scheme: The Ultimate UK Employer Guide
Attract top talent, save on National Insurance (15%), and lock in BADR at 18% on the first £1m.
⊛ 4 min read | By Brent Morrison | July 2026
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EMI Rules Update: In Force Since April 2026
What changed: The EMI changes announced at the Autumn Budget 2025 took effect on 6 April 2026.
The gross assets limit has risen from £30m to £120 million, the employee limit from 250 to 500 full-time equivalents, and the company share value limit from £3m to £6 million. Options can now be exercised up to 15 years from grant, rather than 10. At the same time, Employer National Insurance at 15% continues to make salary-based hiring expensive by comparison.
For high-growth UK start-ups and SMEs, cash flow is often the biggest barrier to recruiting top-tier talent. The EMI Share Options Scheme (Enterprise Management Incentive) resolves this by allowing you to remunerate key employees with equity rather than inflated salaries.
This guide breaks down exactly how the EMI Share Options Scheme works, the strict eligibility criteria, and why the recent rise in Employer National Insurance makes this scheme more relevant than ever.
An EMI (Enterprise Management Incentive) is a government-backed tax advantage scheme. It grants employees the right to acquire shares in the future at a price fixed today. If the company value rises, the employee profits from the growth tax-efficiently.
The Commercial Advantage of an EMI Share Options Scheme
The primary strategic application of an EMI Share Options Scheme is to bridge the gap between what a skilled senior manager demands and what a start-up can afford to pay, especially following the rise in Employer National Insurance to 15% in April 2025.
The Growth Scenario: You need a Commercial Director who commands £100k/year. Paying this as salary attracts substantial Employer NI costs.
- Offer: £60k salary + EMI options over 5% of the company.
- Result: You save immediate cash and NI costs. If the company grows from £100k to £2m in value, that director’s equity is worth £95k, taxed at just 18% on the first £1m lifetime limit rather than Income Tax rates of up to 45%.
Comparison: Standard Bonus vs. EMI Options
Option 1: Standard Bonus/Salary
Tax Rate: Up to 45% (Income Tax)
Employer Cost: 15% National Insurance (Standard Rate)
Timing: Taxed immediately on receipt
Option 2: EMI Share Options
Tax Rate: 18% on the first £1m lifetime limit* (via Business Asset Disposal Relief)
Employer Cost: Generally £0 (No National Insurance)
Timing: Tax deferred until shares are sold
*Business Asset Disposal Relief is charged at 18% on the first £1m of qualifying lifetime gains, with gains above that limit taxed at the normal rate. The 18% rate applies from 6 April 2026.
Eligibility: Does Your Company Qualify?
To qualify for the full benefits of an EMI Share Options Scheme, your company must meet specific government criteria:
- Gross Assets: Must be £120 million or less.
- Headcount: Fewer than 500 full-time equivalent employees.
- Independence: Must not be controlled (51%+) by another company.
- Location: Must have a permanent establishment in the UK.
Certain trades are statutorily excluded from offering EMI options. If your primary trade is Banking, Property Development, Legal/Accountancy Services, Farming, Hotel Operations, or Ship/Steel/Coal production, you likely do not qualify.
Employee Eligibility Criteria
You cannot grant options under an EMI Share Options Scheme to just anyone. The recipient must be a focused employee of the business.
- Working Time: The employee must commit at least 25 hours per week or 75% of their total working time to the company.
- Material Interest: They cannot already hold more than 30% of the company’s shares.
- Value Limit: A single employee cannot hold unexercised options worth more than £250,000 at the time of grant.
Critical Tax Note: The “no income tax” rule only applies if the exercise price is set at (or above) the market value at the date of grant. If you offer a discount (exercise price lower than market value), Income Tax will apply on the difference.
Common Questions About EMI Schemes
What is an EMI Share Option Scheme?
What is the difference between EMI Options and actual Shares?
When do employees pay tax on EMI shares?
Does my company qualify for an EMI scheme?
Is Your Share Scheme Strategy Optimised?
Setting up an EMI scheme involves complex valuation rules and strict HMRC compliance. We help you structure it correctly to maximise benefits.
- ✓ Attract Top Talent with tax-efficient equity packages
- ✓ Secure 18% BADR Rate on the first £1m with proper planning
- ✓ Reduce Employer NI with HMRC-approved valuations
Ensure your scheme is compliant before the next Budget changes.
Validate Your EMI Eligibility Today
Incorrect valuations or ineligible trade activities can void the tax benefits of your EMI Share Options Scheme. Don’t leave your compliance to chance.
Use our quick assessment to check if your company qualifies for the 2025/26 EMI reliefs.
Instant feedback based on current HMRC guidelines..
ABOUT THE AUTHOR
Brent Morrison ACA CTA
Chartered Accountant and Chartered Tax Adviser
Member of the Institute of Chartered Accountants (ICAEW) and Taxation (CIOT) | Director at OutRise | He has over 12 years of experience advising high and fast growth companies across the UK. His approach combines a deep understanding of structuring data and systems, coupled with practical, real-world business experiences.
