EMI schemes and share options

Scheme design, HMRC valuations, growth shares and ERS compliance, handled by specialists who do this every week. Fixed fees, agreed before we start.

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An EMI scheme allows a qualifying company to grant share options to employees with no income tax on a properly structured grant or exercise, and capital gains treatment on sale, often securing the more favourable Business Asset Disposal Relief. It is the most generous employee share scheme in the UK tax code. It is also easy to get quietly wrong, and the errors tend to surface at exactly the wrong moment: during due diligence on a sale.

IP Tax Solutions designs EMI schemes, agrees valuations with HMRC, and keeps the compliance straight for the life of the scheme. Where EMI does not fit, we structure the alternatives: growth shares, unapproved options, or a combination.

The 2026 expansion

EMI eligibility doubled in April 2026

From 6 April 2026, the gross assets limit rose from £30 million to £120 million, the employee limit from 250 to 500 staff, the company-wide options limit from £3 million to £6 million, and the option exercise period from 10 to 15 years. Thousands of companies that did not qualify in March qualify now. If you looked at EMI before and were told no, it is worth looking again. Read our note on the changes.

What we do

EMI scheme design and implementation

Eligibility checks on the company, the trade and each optionholder. Scheme rules, vesting structure (exit-only or time-based), board approvals, option agreements and HMRC notification. Designed around your cap table, not a template.

Fixed fee from £6,500 (plus VAT)

EMI valuations agreed with HMRC

A full valuation model and report, the VAL231, and submission to HMRC Shares and Assets Valuation. Built on the methodology HMRC's own valuers work to, including option pricing analysis where preference structures demand it. A low agreed valuation is what makes the scheme valuable, and it is where most advisers leave money on the table.

Fixed fee from £3,950 (plus VAT)

Growth shares and unapproved options

For non-employees, overseas team members, companies outside EMI, or rewards above the EMI limits. Hurdle design, valuation, s.431 elections, and the interaction with any SEIS or EIS money already in the company, which is where growth share structures most often go wrong.

Scoped and fixed before we start

ERS compliance and scheme maintenance

Annual ERS returns, new grant notifications, disqualifying event monitoring, and putting things right when a notification has been missed. The scheme only delivers its tax treatment if the compliance record is clean on the day of the exit.

Annual returns from £500 (plus VAT) per year

How we work together

  1. Eligibility and design Company, trade and optionholder checks. Scheme structure agreed: who gets what, vesting, exit-only or time-based, leaver terms.
  2. Valuation. We build the model, set the negotiating position and submit to HMRC Shares and Assets Valuation. Typical response time is four to eight weeks, longer for complex capital structures.
  3. Agreement and grant. An agreed valuation is valid for 90 days, so grants complete inside that window: board approval, option agreements executed, elections signed where needed.
  4. Notification and upkeep. HMRC notification by 6 July following the end of the tax year of grant, then annual ERS returns and disqualifying event monitoring for the life of the scheme.

EMI FAQs

How much does an EMI valuation cost?

Our fixed fee starts at £3,950 (plus VAT) and covers the valuation model, the report, the VAL231 form and submission to HMRC, with handling of HMRC's response. Complex capital structures with multiple share classes or liquidation preferences are quoted before we start, in writing.

Do I need HMRC to agree a valuation before granting EMI options?

It is not mandatory, but it is strongly advisable. An agreed valuation fixes the exercise price with certainty, protects the tax treatment if HMRC later asks questions, and is valid for 90 days from agreement, which sets the window for making grants.

What are the EMI limits in 2026?

From 6 April 2026: gross assets up to £120 million, fewer than 500 full-time equivalent employees, £250,000 of unexercised options per employee measured at grant, £6 million company-wide, and options exercisable for up to 15 years. The first two and last two of those were doubled or extended by Finance Act 2025-26, so companies that failed the tests before April 2026 may now qualify.

What happens to EMI options when the company is sold?

Properly structured options are typically exercised immediately before completion and the shares sold with everyone else's, with gains taxed as capital. Business Asset Disposal Relief can apply (at 18 per cent) without the usual 5 per cent shareholding requirement, provided the option was granted at least two years before the sale. Exit terms are a design decision at the start, not a discovery at the end.

What if my company does not qualify for EMI?

The usual alternatives are growth shares, unapproved options, or a CSOP. Each has different tax treatment and different design constraints, and the right answer depends on who is being rewarded and what the company's equity already looks like. That is a structuring conversation, and the first call costs nothing.

Can EMI run alongside SEIS or EIS investment?

Yes, and most of our EMI clients have SEIS or EIS money in the company. The schemes coexist, but the share rights have to be designed with both regimes in mind. Growth share waterfalls in particular can put S-EIS relief at risk if the new class ranks ahead of investors' shares. We check both sides before anything is granted.

Start with a conversation

Thirty minutes, no charge. Bring the cap table and we will tell you whether EMI fits and what it should cost.

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