Enterprise Management Incentive Schemes

Reviewed January 2026

Introduction

EMIS options are tax-favoured options aimed at smaller companies wanting to incentivise and retain key employees. Such companies can grant employees options to acquire shares, with no income tax or national insurance contributions on any increase in the value of the shares, if the options are granted at market value. Any gain realised will be subject to capital gains tax.

This guide should not be relied upon as legal advice and you should contact us for advice on your specific circumstances.

How do Enterprise Management Incentive Schemes Work?

EMIS options can be granted over the shares of any company, provided the following requirements are met:

• the gross assets of the company must not exceed £30 million at the time of grant if the options are granted prior to 6 April 2026. For options granted on or after 6 April 2026, the value of the gross assets of the company must not exceed £120 million at the time of grant.
• the company must be independent of other companies.
• the company must have only qualifying subsidiaries.
• the company must be a trading company with a qualifying trade or (in a group structure) EMIS options must be granted over shares in the parent company of a trading group and at least one trading subsidiary must carry on a qualifying trade.
• the company (or a subsidiary with a qualifying trade) must have a UK permanent establishment.
• the company must have fewer than 250 full-time employees if the options are granted prior to 6 April 2026. For options granted on or after 6 April 2026, the company must have fewer than 500 employees at the time of grant.
• the employee to whom the option is granted must satisfy certain requirements as to their working time and must not hold a material interest (usually in excess of 30% of the shares) in the company. There are also limits on the EMI options an individual may hold.

EMIS options must:

• be a right to acquire non-redeemable, fully paid up, ordinary shares.
• take the form of a written option agreement between the grantor and the employee.
• be capable of being exercised within 10 years after the date of grant if the options are granted prior to 6 April 2026. For options granted on or after 6 April 2026, the EMIS options must be capable of being exercised with 15 years after the date of grant.
• prohibit the transfer of any of the employee’s rights under them.
• if capable of exercise after the employee’s death, not be capable of exercise more than one year after death.
• set out:
  • • details of any restrictions applying to the shares under option that could make them restricted securities;
    • any conditions affecting the terms or extent of the employee’s entitlement under the options, such as performance conditions;
    • the date of grant;
    • the number, or maximum number, of shares under the option;
    • the exercise price or the method for determining it; and
    • when and how the option may be exercised.
• be notified to HMRC by 6 July following the end of the relevant tax year of the grant (although this requirement will be removed from April 2027).

Receive our guide

To help businesses understand the various EMI scheme requirements, we have compiled a complimentary guide. This sets out useful details on EMIS, including summarising the eligibility criteria, the different types of EMIS available and the key steps a company will need to take before introducing an EMIS.

To receive our guide, please email any of the following: Mark Williams, Beth Jones or Christiana McKeown.