4 minute read | November.26.2025
UK Chancellor Rachel Reeves has announced that qualification criteria for enterprise management incentive (EMI) options will be “widened”. While legislation has not yet been published, HMRC published a Policy Paper which headlines the following changes:
Changes will take effect from 6 April 2026. These changes to the EMI regime are markedly different from those trailed in recent weeks, which focussed on the individual limit for awards.
Against the backdrop of a challenging budget, broader access to EMI options is a significant win for the UK’s start-up and scale-up ecosystem, for whom EMI options represent the gold standard of tax-advantaged incentive plans.
EMI options are of particular importance for cash-strapped businesses who require top-level talent to help scale to the next stage, but don’t yet have the cash flow to support comparable salaries.
As with all tax-related proposals, the devil is in the details when it comes to implementing EMI reforms. Nevertheless, there are some key questions that industry and practitioners alike will want to see answered:
As we published recently, Reeves trailed an increase to the EMI individual limit – reportedly by “a multiple” of the current £250,000 cap. Since the publication of the Policy Paper, it is clear that this proposal was abandoned at some point before the Chancellor made it to the despatch box. This is something of a disappointing outcome, and a lost opportunity for the government to make the most of the increases, as it is likely that many of the higher-value companies that the regime reforms seek to appeal to will hit the £250k limit faster than those at earlier stages of development.
No detail was provided in the announcement as to whether any updates to the EMI regime may be applied retrospectively to existing EMI share plans, however the Policy Paper confirms that the increased lifespan of EMI options will be capable of retrospective application to EMI options which have not already expired or been exercised. While some plans will have included future-proofing language to ensure that grants can be made in line with future individual and company limits, this was a key point of detail which will drive uptake of the regime changes.
EMI plans are notoriously difficult to operate in accordance with the associated legislation and, if not set up or operated correctly, result in loss of income tax relief.
Perhaps the most unexpected of the EMI updates, the change in lifespan of EMI options, from 10 years to 15, is particularly interesting. Against a backdrop of companies staying private for longer, with more private funding rounds pre-exit, this update better aligns EMI options with the realities of present market conditions.
While practitioners would overwhelmingly have welcomed easing the notification requirements or the stringent qualifying criteria or extending the exercise period following a disqualifying event (to name a few), the concessions made by the government are nevertheless a positive outcome for industry. While the government could theoretically have taken the opportunity to make more substantial revisions to the EMI regime, given legislative priorities in the immediate future, this was always going to be a significant ask.
Orrick’s London-based Compensation & Benefits team regularly advises a wide range of businesses on the design and implementation of EMI and other tax-advantaged and non-tax advantaged employee incentive plans. If today’s announcement has made you consider implementing an EMI plan, or you currently have a plan and wish to maximise the new limits, we would be delighted to hear from you.