Budget 2026 announced that the government will introduce legislation in Finance Bill 2026-27 to make changes to the Company Share Option Plan (CSOP) and Enterprise Management Incentives (EMI) schemes.
- The CSOP individual option limit will be increased to £120,000 (previously £60,000).
- The interaction between the CSOP and EMI individual options limits will be removed.
- The CSOP exercise period will be extended to 15 years.
- The period for certain tax-advantaged and non-tax advantaged shares and share options reserved by third parties to be excepted from the disguised remuneration rules will also be extended to 15 years.
- The exception for Employee Ownership Trusts (EOTs) in the EMIrules will be extended to companies arranging to become controlled by an EOT.
- The EMI exercise window following disqualifying events will be extended to 180 days.
The changes will take effect from 6 April 2027.
What are they?
Enterprise Management Incentives (EMI) and Enterprise Management Incentives 2 (EMI2) (previously known as CSOP) are tax-advantaged share schemes. They allow eligible companies to give employees the option to buy shares in the future at an agreed price when the option is granted.
From 28th October 2026, the Company Share Option Plan (CSOP) will now be known as EMI2. The scheme will retain the CSOP name in legislation.
From April 2027:
- the individual EMI2 limit will double from £60,000 to £120,000
- the interaction between EMI and EMI2 will also be removed, allowing the schemes to operate independently of each other
- the maximum period for exercising EMI2 options whilst retaining tax advantages will increase from 10 years to 15 years
EMI
Through EMI, an employer can give an employee share options up to the value of £250,000 in a 3-year period. Employees must work at least 25 hours a week or 75% of their total working time for the company.
Recipients will not have to pay Income Tax or National Insurance if they buy the shares:
- for at least the market value they had when granted the option
- within either 10 years or 15 years of being offered them
EMI2
Under current rules, EMI2 gives the option to buy up to £60,000 worth of shares from 6th April 2023 (or £30,000 if the options were granted before 6th April 2023).
If someone bought shares between 3 and 10 years after being offered them, they will not pay Income Tax or National Insurance on the difference between what they pay for the shares and what they’re actually worth.
From 6th April 2027, the limit will increase to £120,000, the interaction with EMI will be removed and the maximum period for exercising will increase to 15 years.
For both schemes there may be Capital Gains Tax when selling the shares.
Changes to the process of notification
The government will remove the requirement for a company to submit a separate notification of a grant of EMI option to HMRC.
Instead, a company will be required to notify such a grant through the end-of-year return.
The changes will take effect for options granted on or after 6th April 2027.
PAYadvice.UK 28/10/2026