EUROPEANCHAPTER

At Budget 2025, the UK government announced major expansions to the Enterprise Management Incentives (EMI) scheme from 6 April 2026, increasing the employee limit to 500, gross assets to £120m, and the company-wide option limit to £6m, making EMI available to more scale-ups. The maximum EMI option exercise period is extended from 10 to 15 years, with the change intended to apply retrospectively to existing options, and EMI/CSOP rules will also allow PISCES platform sales as a valid exercise event. These updates, along with earlier implementation timelines starting from 2025 for PISCES-related changes, aim to improve liquidity options and broaden access to tax-advantaged employee equity schemes.

UK employee share schemes are a key tool for attracting and retaining talent, especially in scale-ups, with four main HMRC tax-advantaged options: EMI, CSOP, SAYE, and SIP. From April 2026, EMI is significantly expanded, increasing company size limits, asset thresholds, employee caps, and option lifetimes, making it accessible to many more businesses and still offering the most generous tax treatment (capital gains rather than income tax). Each scheme serves different needs—from EMI for scale-ups, CSOP for larger or ineligible firms, SAYE and SIP for all-employee participation—while non-tax-advantaged options like growth shares are used when HMRC schemes don’t fit but require more careful tax structuring.

This HMRC helpsheet explains how employee share schemes and share options are treated for Capital Gains Tax, covering approved schemes (like SIP, SAYE, CSOP, EMI) and unapproved arrangements. In general, your CGT cost is what you paid for the shares plus any amount already taxed as employment income, with special rules for different schemes (for example, SIP shares can be CGT-free if held correctly, and EMI options get favourable treatment including from grant date for relief purposes). It also sets out administrative rules such as reporting requirements, elections (like same-day share acquisition elections), transfers to ISAs or pensions, and reliefs for certain disposals, all of which affect how and when tax is calculated on employee-related shares.

The Squire Patton Boggs report on “Hot Employment Law Topics for 2026” highlights that a central global theme is ongoing regulatory “change,” with many jurisdictions introducing new employment laws that generally increase worker protections and expand employer obligations. Key focus areas include pay transparency and pay equity requirements, growing AI and technology regulation in the workplace, and stricter rules around compliance, data protection, and employee rights. Overall, the report emphasises that employers should expect higher legal, financial, and compliance risks in 2026 and will need to proactively adapt policies and workforce practices to keep up.