How companies can prepare for the changes to the EMI scheme
Our previous blog explored the headline changes to the Enterprise Management Incentive (EMI) scheme and what the ramifications are for UK share schemes and businesses, from expanded eligibility thresholds that opened the scheme up to many, to a longer exercise window.
This follow-up guide sets out the practical actions companies should take ahead of the April 2026 and April 2027 changes to ensure their EMI strategy, governance, and internal processes are ready for when the changes to the regime occur.
Table of Contents
- Assess whether you will qualify under the new thresholds
- Reevaluate your equity strategy for future grants
- Revisit the size and structure of your EMI option pool
- Review and update your existing EMI grant documentation
- Coordinate with your HR, Finance, Legal and Tax teams
- Review your compliance processes ahead of 2027 simplifications
- Prepare employee communication plans
- Scenario plan for 2026 hiring and retention
- Evaluate your approach to senior hires
- Investigate hybrid schemes where EMI caps don’t go far enough
- Prepare board and investor updates
- Conclusion
Assess whether you will qualify under the new thresholds
Understanding your future EMI eligibility will be the foundation for evaluating and amending your equity strategy. To determine whether your organisation will qualify from April 2026, begin with the following assessments.
Checklist
- Review projected gross assets for the next financial year to determine whether they are likely to fall within the expanded £120m limit
- Forecast future employee headcount growth against the new ceiling of 500 full-time employees
- Identify subsidiaries or group companies whose growth targets may impact the group’s eligibility
- Assess whether any corporate restructures planned for 2025–26 could affect EMI access
- Use these assessments to determine whether EMI can be reintroduced, if your company had previously “aged out”, or adopted for the first time
This mapping will shape your 2026-27 equity strategy and determine how aggressively EMI can be used in hiring, rewards, and retention.
Reevaluate your equity strategy for future grants
As EMI becomes accessible to a wider range of companies, it’s crucial to revisit how equity is structured across your business and ensure your approach remains competitive and aligned with strategic priorities.
Key questions to answer
- Can EMI replace or reduce reliance on Company Share Option Plans (CSOP), unapproved options, growth shares, or other bespoke long-term incentive plans?
- How does shifting towards EMI alter the competitiveness of your total rewards package?
- Should you revisit existing salary-equity trade-offs?
- How can EMI be used to reinforce key people priorities such as talent retention, leadership succession, or incentivisation plans?
- Does your remuneration committee or board sign-off process reflect these new strategic options?
Companies that previously used EMI at the initial stages of their journey may now find they can return it to the centre of their compensation strategy. A clear strategic framework will give your equity programme stronger coherence and flexibility.
Once your strategic priorities are clear, the next step is modelling how your expanded EMI pool can support these objectives in practice.
Revisit the size and structure of your EMI option pool
With the EMI option pool doubling from £3m to £6m, companies now have greater flexibility in how equity is allocated, but this requires careful modelling and forward planning to ensure sustainable use.
To prepare effectively, companies should take the following steps:
- Assess how the expanded pool affects your target ownership ratios, fully diluted cap table, and your three-to-five-year hiring plans
- Model various distribution strategies such as:
- Broader participation within the scheme, such as smaller grants to all employees
- Larger leadership grants that strengthen retention at that level
- Multi-year refresh cycles that avoid invoking dilution spikes in a single year
- Promotion-linked top ups that formalise equity into career development
- Review authorisation levels and decide whether to increase your “authorised but unissued” option headroom to support growth and fast-moving hires
- Review how the expanded pool aligns with any planned fundraising rounds, especially if new investors will require headroom protection
Alongside the questions, it is also a suitable time to revisit your internal equity approach to ensure allocation principles are clear, consistent, and defensible. Documenting these principles now ensures predictable, defensible decision-making as the scheme grows.
With a clear allocation plan in place, attention should turn to ensuring your legal documentation is compliant with the new rules.
Review and update your existing EMI grant documentation
Before applying the new 15-year exercise window, companies must confirm whether their scheme rules and historic grant documents support the extension.
Once these have been reviewed, prepare clear communications to employees where amendments are needed. Completing this review avoids delays once the new rules come into effect.
With documentation confirmed, the next priority is coordinating operational changes across your core teams. This ensures your internal processes, governance, and sign-off structures are aligned ahead of April 2026.
Coordinate with your HR, Finance, Legal and Tax teams
Implementing the EMI reforms within your business will require coordinated action across multiple departments, making cross-functional alignment essential ahead of April 2026.
One suggested approach
- Establish a cross-departmental EMI working group running through mid-2026
- Update all internal EMI policy documents and employee communications
- Build revised dilution models that factor in the increased EMI pool and future hiring
- Review your vesting conditions, leaver clauses, and performance triggers to ensure alignment with the extended exercise window
- Incorporate updated eligibility checks and working-time declarations into your onboarding processes
- Review remuneration or board approval processes to ensure they are ready and viable for more frequent or larger grant cycles
Each department should understand its role reduces the risk of non-compliance and improves the employee experience.
Review your compliance processes ahead of 2027 simplifications
Although administrative simplification is planned, businesses must still operate under the existing EMI rules until April 2027, making now the ideal time to tighten compliance processes.
Preparation should include
- Mapping the full EMI process end-to-end:
- Grant creation
- Board approval
- Valuation steps
- Employee declarations
- 92-day HMRC notification
- ERS portal reporting
- Identifying bottlenecks where delays have historically occurred
- Ensuring all EMI documentation is standardised, stored centrally, and audit-ready
- Reviewing who within the business is responsible for notifications and record-keeping
- Preparing for increased digitisation, aligning with HMRC’s Making Tax Digital roadmap
By streamlining now, companies will benefit most when digital-first processes replace the current compliance model.
Prepare employee communication plans
Clear and timely communication will help employees understand the value of EMI and how the upcoming changes affect their awards, especially when schemes are already in place.
A clear communication plan should include the following elements.
Communication checklist
- Develop a communication plan that explains:
- What EMI is
- How the new 15-year exercise window benefits employees
- How grant sizes or eligibility criteria may change from 2026 onwards
- Train your managers and HR business partners to speak confidently about EMI during hiring and performance reviews
- Provide updated EMI summary documents and FAQs to new joiners
- As an additional option, consider running informational workshops or recording sessions on demand for your staff
Clear communication strengthens trust and helps employees understand the long-term value of EMI.
Scenario plan for 2026 hiring and retention
The expanded EMI limits will materially influence how companies compete for talent, making proactive scenario planning essential for recruitment and retention from 2026 onward.
To anticipate skills needs and hiring pressures, businesses should begin planning for multiple growth scenarios.
Companies should:
- Use EMI strategically to attract candidates who expect equity as part of standard compensation
- Build multiple hiring scenarios for 2026–2028, modelling equity consumption under different growth rates
- Evaluate whether they need to revise their offer letter templates to standardise EMI messaging
- Ensure recruiters and HR partners are updated on how EMI can be pitched to candidates
By doing the above, companies should see their conversion rates rise for offers and retention across their talent pool. Proactive planning now ensures a smoother, more competitive hiring cycle once the new rules take effect.
Evaluate your approach to senior hires
The larger EMI pool creates new opportunities to reshape executive compensation packages, improve retention, and strengthen negotiation flexibility at senior levels.
To prepare effectively, consider the following actions.
In preparation:
- Model new equity bands for senior hires using the expanded EMI headroom
- Consider whether unapproved options or growth shares can be reduced or replaced
- Review whether your long-term incentive plan (LTIP) design should change now that EMI is viable for a broader leadership cohort
- Reevaluate retention risk for key management ahead of key milestones such as a funding round (e.g. Series A, B or C) or exit planning
Investigate hybrid schemes where EMI caps don’t go far enough
Stemming from the per-employee EMI limit remaining fixed at £250,000, some senior and specialist roles will require hybrid or layered structures to remain competitive.
Where additional equity value is needed, companies can consider several hybrid approaches.
Options include:
- EMI for the first £250k, followed by:
- CSOP for additional tax-advantaged headroom
- Unapproved options for high-value packages
- Growth shares in certain ownership structures
- Considering using phantom equity or cash-settled share appreciation rights (SARs) where dilution sensitivity is high
- Ensuring that your remuneration committee has a clear framework for when hybrid packages are appropriate
The best plan for an organisation should maintain competitiveness whilst staying within EMI rules.
Prepare board and investor updates
Boards and investors will expect a clear plan for how the business intends to operate under the expanded EMI regime, making structured updates essential for alignment and approval.
A comprehensive update should include:
- Eligibility assessments under the new thresholds
- Revised equity pool modelling and dilution forecasts
- New or updated remuneration frameworks
- Anticipated retention benefits or risk mitigation
- Operational changes needed to support EMI expansion
- A timeline that charts:
- Valuation planning
- Grant cycles
- Employee communications
- Policy updates
Including EMI updates in the 2025/26 AGM or remuneration committee cycles will ensure alignment at senior levels. Gaining early alignment at board level will reduce approval friction and support consistent application of the new EMI framework.
Conclusion
The EMI reforms open the door to a much more flexible and generous scheme, but businesses need to be ready for them to really deliver value at scale for their wider workforce and business.
By taking the steps that make sense for your business now, you’ll be in a far stronger position when the new rules come into effect. This will give your people clarity, your processes will be structured, and your organisation should be stronger when it comes to attracting and retaining key talent to grow your business.
About the Author
Alex Kenvyn
Head of Share Plans at Cytec Solutions
Alex has been in the industry for over fifteen years, working in roles across both the client and provider side of equity management. A former GEO UK Chapter committee member, she currently helps organise events with Next Wave, a governance and equity networking group. Outside of her role at Cytec, Alex is kept busy running around after her toddler and is a keen baker when she has the time, which the rest of the team appreciate when she brings in cakes.
