Budget 2026: What EMI and EMI2 changes mean for employers

Changes announced in Autumn Budget 2026 could give businesses greater scope to reward and retain employees through share options.

From 6 April 2027, proposed reforms to Enterprise Management Incentives (EMI) and the Company Share Option Plan (CSOP), now known as EMI2, will increase individual option limits and provide greater flexibility for employers.

Jeremy Glover, Partner in Tax & Incentives at Jurit, explores what the proposals could mean for businesses reviewing their employee share incentives, growth plans and succession arrangements.

Key opportunities

Double the EMI2 option limit

The individual EMI2 option limit will increase from £60,000 to £120,000, enabling businesses to make significantly larger tax-advantaged awards to key employees.

Combine EMI and EMI2 more effectively

EMI2 awards will no longer count towards an employee’s existing £250,000 EMI limit. Subject to the relevant conditions, employees could receive tax-advantaged options with a combined grant-date value of up to £370,000, creating powerful new possibilities for management incentivisation.

Longer period to realise value

The maximum tax-advantaged exercise period for EMI2 options will increase from 10 years to 15 years, giving participants more time to benefit from future growth and providing greater flexibility around exits and liquidity events.

Greater protection following disqualifying events

The period for exercising EMI options while retaining favourable tax treatment will extend from 90 days to 180 days, reducing the risk of valuable tax benefits being lost.

Support for employee ownership transitions

Businesses moving towards Employee Ownership Trust (EOT) structures are expected to have greater flexibility to continue granting EMI options during the transition process.

Why this matters

These proposals could be particularly valuable for businesses that:

• Are approaching or exceeding existing EMI limits;
• Are considering how best to incentivise senior management and future leaders;
• Expect significant growth over the coming years;
• Are planning for an exit, succession strategy or employee ownership transition; or
• Want to strengthen recruitment and retention in a competitive talent market.

Importantly, the new statutory limits and flexibilities are unlikely to apply automatically to existing arrangements. Many businesses will need to review and potentially update their incentive plan documentation to take full advantage of the changes.

How we can help

Now is an ideal time to review your equity incentive strategy.

We can help you assess the opportunities created by the Budget, evaluate whether EMI, EMI2 or a combination of both is appropriate for your business, and ensure your incentive arrangements are structured to support your long-term growth, retention and succession objectives.

To discuss what these proposals could mean for your business, please contact Jeremy Glover.

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