Competing for talent gets harder as businesses scale. Candidates have more choices, often including the likes of Big Tech and large listed companies. They want competitive salaries and even more competitive options.
If you've been operating outside of the old Enterprise Management Incentive (EMI) thresholds, you've been competing without one of the most effective tools in the game.
The Autumn 2025 Budget changed this, with EMI eligibility expanding to companies with up to 500 employees or £120 million in assets, from April 2026 onwards.
That's double the old headcount limit and four times the asset threshold, making an estimated 1,800 companies and over 70,000 employees newly eligible for the EMI.
This is an incredible opportunity to compete for top talent. We’ll talk you through the change and the benefits.
The expanded EMI limits are a big deal for scaling companies. There are three core reasons why:
First, the tax treatment. When structured correctly, EMI offers the most tax-efficient equity structure available in the UK. Employees can pay significantly less tax on their gains than under other schemes, so the equity you grant is more valuable.
Second, the capacity. You can grant up to £250,000 per person in EMI options (CSOPs are £60k). The company-wide limit is now £6 million in unexercised options from April 2026, up from £3 million. That creates room to make meaningful grants to senior hires and refresh equity for long-serving employees.
Third, they have gravitas. EMI signals that a company wants to maximise equity rewards for both new hires and longer-term contributors.
For companies newly eligible under the expanded thresholds, these advantages become accessible from April 2026.
The EMI will crossover with the Company Share Options Plan (CSOP) which was previously reserved for those who couldn’t use the EMI under the old thresholds.
Additionally, the new thresholds are great news for companies with existing EMI schemes or those rolling one out soon, since they’ll be eligible for longer. If you’re mid-growth, you have more runway before having to switch schemes.
Scaling rapidly is fantastic. Sustaining it means keeping your team aligned and invested in the outcome.
You need to hire experienced leaders without burning through cash. You need to keep early employees with institutional knowledge. You need to extend ownership beyond the founding team to build alignment as the company grows.
The EMI expansion directly addresses these scenarios and more, giving larger and scaling companies a lever they can pull to crush more milestones.
Scaling companies often need to bring in CFOs, CMOs, VPs of Sales, Chief Product Officers, etc.
EMI lets you structure packages that balance cash and equity in ways that weren't possible prior to the changes. You can offer a competitive base salary plus meaningful equity. The higher per-person limit allows you to structure equity as a substantial part of the package.
If the company progresses and/or the individual meets their vesting milestones, the tax treatment maximises potential upside.
Without EMI, you either pay more cash or offer equity that's less valuable because of how it's taxed.
Team members who joined when you were a smaller company may have reached the end of their vesting period or are imminently. They built core systems, and they know the business inside out. Recruiters often make a pass at them.
EMI's limits create more potential to refresh grants so you can keep them. You can grant additional options to fully vested employees, resetting the clock and giving them a compelling reason to stay even longer.
The old £30 million asset threshold excluded companies that were capital-intensive by nature – often advanced manufacturing or B2B retail where stock is expensive.
Previously, EMI was off the table, even though your team size easily qualified. Now, you can compete for specialised talent, often with companies that could offer EMI when you couldn't before.
Now the EMI thresholds are increased, the scheme has considerably more longevity.
Scaling companies with existing EMI schemes or those planning on making one will be able to stick with them for longer. This represents simplicity and continuity on the employee side with less intermixing of different schemes.
When a company is small, equity is more common and universal. At hundreds of people, typically only early employees or senior hires have meaningful stakes.
A well-designed EMI scheme under the new rules makes it economically viable to grant more broadly than you could before. Think customer support, operations, and mid-level roles.
When ownership is diverse and built into the company DNA, the alignment it creates is an extremely powerful scaling device.
EMI schemes are more flexible than most assume. They can be designed to support a wide range of goals, from retention and performance incentives to succession planning and more. Here are some pointers:
Vesting schedules are flexible, but the standard is generally four years with a one-year cliff.
Some companies use longer vesting for leadership roles – five or six years – to create stronger retention through key growth phases. Others add performance conditions to time-based vesting, so equity only vests if the company or an individual meets specific targets.
If retention is the priority, longer time-based vesting is the go-to. If you want to tie equity to outcomes, performance vesting achieves that.
Some contributors drive outsized impact.
EMI options still let you grant up to £250,000 per person, but for eligible companies, the total value of unexercised options will double to £6 million.
The result? More room to offer competitive, meaningful equity rewards to top performers (although we're advocates of motivating the whole team with skin-in-the-game!).
As companies scale, leadership often begins to change. The founding team might not remain the right team with hundreds of employees.
The EMI helps smooth those transitions by granting meaningful equity to new leaders joining at senior levels, making the role attractive even if they're not founders. You can use refresh grants to retain high-performing managers who may be candidates for future leadership roles.
When equity is part of how you think about talent development, it becomes a tool for building an AAA team that drives your business toward long-term growth or an exit.
If you’re newly eligible for the EMI in 2026 and want to start building a scheme, where do you start?
First, not every business will be eligible for the EMI scheme, even if it falls within the new limits, as certain trades and sectors are excluded. Recipients must also work at least 25 hours per week, or 75% of their total working time.
Creating a new scheme requires an up-to-date valuation (technically not a legal requirement but strongly recommended), board approval, and careful attention to dilution.
Companies need to assess whether their existing option pool has sufficient capacity for planned EMI grants. If not, the pool needs topping up, which requires shareholder approval and dilutes existing ownership stakes.
From the HR’s perspective, many employees simply won’t understand what the EMI is, how options work, and the potential upside.
If not communicated clearly, granting equity risks may feel too hypothetical. Showing people the range of outcomes helps them understand why equity matters and why they should care about vesting schedules.
Some companies share these models during onboarding. Others run sessions where they walk through scenarios. Either way, making equity tangible rather than abstract makes it more compelling.
Equity forms part of the total compensation package, so it needs to align with how you track offers, manage employee data, and report to accounting and the board.
Some companies integrate equity data with their Human Resources Information System (HRIS) or other software platform so managers can view what each person has been granted.
Vestd makes it easy to handle equity management tasks – tracking grants, vesting, exercises, and generating reports for His Majesty's Revenue and Customs (HMRC).
When it's time to report for any reason – management accounting, due diligence, audits – everything is at your fingertips.
The EMI expansion is brilliant news if you've been stuck watching smaller competitors offer better equity packages. Or if you’ve moved onto the CSOP but previously got a lot of the EMI.
Either way, from April 2026, you're back in the game!
The new thresholds mean you can offer equity that's competitive, not only on paper, but in what employees keep after tax. It really matters when you're hiring people who have choices.
Vestd helps with the operational side - grants, vesting schedules, HMRC reporting - so you're not stuck in spreadsheets when you should be thinking about who to grant equity to and how much.
We've built the platform specifically for companies scaling fast and using equity seriously (and we're certainly no strangers to EMI schemes!).
Book a chat with our team. We'll talk you through how the EMI can perform for your scaling business.
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