Enterprise Management Incentives offer the most tax-efficient way to reward and retain key employees. We design, document, and maintain your option scheme from grant to exit.
FA 2026 increased the company-wide EMI limit to £6m (from £3m), raised the gross assets threshold to £120m, and extended the maximum exercise period to 15 years. If your existing scheme was designed under the old limits, it may be worth reviewing whether restructuring is beneficial.
Published starting prices, with a written scope and a fixed fee agreed before any work begins.
Preparing and agreeing the unrestricted and actual market values with HMRC on form VAL231, so the exercise price is set on a figure you can rely on later. Agreed valuations are normally valid for 90 days.
Option deed and scheme rules drafted for your company, covering vesting, leaver provisions, exit terms and the exercise window under the FA 2026 fifteen year limit.
EMI40 registration, grant notifications and the annual ERS return, which must be filed for every registered scheme even where nothing happened during the year.
Most companies setting up a scheme for the first time need the valuation and the documents together. Where that applies we scope both in one engagement.
Common questions on eligibility, valuation and HMRC filings.
From 6 April 2026 the company or group must have gross assets not exceeding £120 million and fewer than 500 full time equivalent employees, and must be carrying on a qualifying trade. The previous thresholds were £30 million and 250 employees, so a number of companies that had outgrown EMI now qualify again. Certain activities are excluded, including property development, financial services, and legal and accountancy services. Where a company has a mix of activities, the test is whether the excluded activities amount to a substantial part of the business, which HMRC takes as more than 20 per cent.
An individual can hold unexercised EMI options over shares worth up to £250,000 measured at the date of grant, and that limit has not changed. The company wide limit doubled to £6 million of unexercised options across all participants from 6 April 2026. Once an individual reaches £250,000 they cannot be granted further EMI options for three years, even if the earlier options have been exercised in the meantime.
It is not compulsory but almost every company does it. Agreeing the unrestricted and actual market values with HMRC in advance using form VAL231 removes the risk of a dispute later about whether the exercise price was set correctly, and gives you a figure you can rely on when the options are exercised. An agreed valuation is normally valid for 90 days.
For options granted on or after 6 April 2024 the grant is notified to HMRC by 6 July following the end of the tax year in which it was made, rather than within 92 days as was previously the case. Older scheme rules and option agreements often still specify 92 days, and where they do the contractual deadline continues to bite even though the statutory one has moved, so it is worth checking your documents. From 6 April 2027 the separate notification requirement is being removed altogether and grants will simply be reported through the annual return. That annual return is due by 6 July for every registered scheme and must be filed even where nothing happened during the year.
Options granted on or after 6 April 2026 must be capable of exercise within fifteen years, extended from ten. Existing unexercised options can generally be amended to take advantage of the longer window without losing their tax advantaged status, but amending an option agreement can amount to a cancellation and regrant if handled badly, so it should not be done without advice. Most schemes are written so that options only become exercisable on an exit, which keeps the tax position simple and avoids employees holding shares in a private company with no market for them.
Where the exercise price was set at or above the actual market value agreed at grant, there is no income tax or National Insurance on exercise. The employee pays capital gains tax on the eventual sale. Where the option was granted at least two years before the shares are sold, business asset disposal relief may apply, which is charged at 18 per cent from 6 April 2026, up from 14 per cent in the previous tax year. The company can also claim a corporation tax deduction for the gain the employee makes on exercise.
Longer pieces on the points founders get wrong most often.
The gap between telling someone they have equity and them holding a valid EMI option, and what the delay costs them.
Gross assets to £120m, employees to 500. Companies told they had outgrown EMI are back inside it.
Notification moved to 6 July. Your scheme rules probably still say 92 days, and that still binds you.
The gap between telling someone they have equity and them actually holding a valid EMI option is where most schemes go wrong. It is a short conversation to find out where you stand.
Book a call →30 minutes, no charge, no pitch
Options granted at or above AMV: no income tax or NIC on exercise. CGT on exit, potentially at the 18% Business Asset Disposal Relief rate where the option was held for at least two years.
HMRC valuation £750 + VAT
Scheme documents £1,500 + VAT
Compliance quoted on scope
Fixed fee agreed in writing before work starts.
Company-wide: £6m
Gross assets: £120m
Employee limit: 500
Exercise period: 15 years
We handle the full process from eligibility check to HMRC registration.
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