EMI scheme changes and your cap table

Upcoming changes to Enterprise Management Incentive (EMI) schemes in the UK will broaden eligibility to more companies than ever before in 2026. For many scale-ups now may be the time to reassess whether this is the right plan for your equity compensation needs.

EMI schemes are a tax-efficient share option plan, available in the UK, used to reward and incentivise employees. Up to now, HRMC (HM Revenue & Customs) eligibility rules have mostly limited this type of plan to start-ups; however, changes announced in the recent Budget to be implemented in 2026 will ease restrictions and make EMIs feasible for many scale-up and more mid-sized companies.

Current EMI rules and upcoming changes

From April 6^th 2026 the EMI eligibility criteria will be extended to companies with:

• Gross assets of up to £120 million (an increase of 400% on the current £30 million limit)
• Up to 500 employees (doubling the existing limit of 250)

The cap on the total value of options that can be issued under an EMI has been doubled from £3 million to £6 million.

In addition, the exercise period associated with EMI options is being extended from 10 to 15 years, and this can also be retrospectively applied to existing contracts.

It is important to note that some rules in relation to company criteria remain unchanged, such as:

• Permanent base in the UK
• Not majority-owned by another entity
• Not in ‘excluded activities’, e.g., banking, insurance, farming, property, legal services, hotels and care homes, and shipbuilding

EMI and your cap table

Against this backdrop, 2026 will likely see many previously ineligible companies actively considering an EMI plan for their employees. As with any other form of equity compensation, introducing an EMI will have implications for your cap table.

These are some of the factors you need to consider:

• Option pool size: Be conscious of your future needs, not just your current needs.
• Dilution impact: Every EMI grant reduces existing ownership percentages. Existing shareholders will need to understand the long-term impact before approving grants.
• Tracking of vested vs. unvested options: Accurate tracking of vested vs. unvested options is vital if your cap table is to offer an accurate snapshot of the ownership situation at any given moment.
• Exercise price: EMI options use a valuation agreed with HMRC. This price must be recorded correctly on the cap table, as that will factor into calculating potential gains and any subsequent tax treatment.
• Expiry dates and good/bad leaver rules: Each EMI contract must have an expiry date. You also need clear rules in place around what happens when an individual prior to that date and under what circumstances.
• HMRC compliance and reporting: HMRC rules require companies to submit a formal notification when granting EMI options and to also file an annual return. Arising from this, it is vital that your cap table reflect accurate grant data at all times.

You can read more on the specifics of how to set up an EMI scheme here.

What next?

At J.P. Morgan Workplace Solutions we have worked closely with companies of all sizes to help manage their equity awards and cap tables. So, whether you are looking to set up an EMI scheme for the first time, or are considering how these changes might impact the administration of an existing offering this year get in touch.

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