For many business owners, preparing for a sale centres on boosting profitability and growing revenue.
However, owners planning an exit should also consider introducing a structured share incentive scheme to motivate and retain key employees.
Recent Budgets have made significant changes to Enterprise Management Incentive (EMI) schemes, bringing many more growing businesses into scope.
What changes have been announced?
The Autumn Budget on 28 October 2026 confirmed that the Company Share Option Plan (CSOP) is being rebranded and expanded as EMI2.
The original EMI scheme remains available to qualifying companies, while EMI2 is aimed at growing companies that have outgrown EMI or are not eligible for it.
These announcements follow significant changes to the existing EMI regime, which were announced in the Autumn Budget 2025 and took effect from 6 April 2026.
The qualifying gross assets limit increased from £30 million to £120 million, while the employee limit rose from 250 to 500 full-time equivalent employees.
The total value of unexercised EMI options a company can have in issue also doubled from £3 million to £6 million and the maximum exercise period was extended from 10 to 15 years. This gives businesses greater flexibility when rewarding key members of staff.
Looking ahead, further changes are due to take effect from 6 April 2027, subject to legislation.
The individual limit on EMI2 options will double from £60,000 to £120,000 and their exercise period will be extended from 10 to 15 years. Employees will also be able to hold up to £120,000 of EMI2 options on top of the £250,000 EMI limit, rather than the two schemes sharing a single £250,000 cap.
For the original EMI scheme, the period in which options can be exercised after a disqualifying event, such as the company coming under another company’s control, will also be extended from 90 to 180 days.
How does this affect business owners planning an exit?
When buyers look at a business, they’re not just buying its products or client base. They’re also investing in the people who help make the business successful.
That’s where EMI and EMI2 can make a real difference. By giving key employees a stake in the future success of the business, owners can encourage long-term commitment and build a strong management team that can lead the business after a sale.
This can be particularly valuable in the years leading up to a sale, as buyers often place a premium on businesses that aren’t overly reliant on the owner.
The recent changes mean that more businesses can now use tax-advantaged share schemes as part of their growth and exit strategies.
How can we help?
Preparing a business for sale requires careful planning and a clear strategy.
Our team can help you assess whether an EMI or EMI2 scheme could strengthen your management team and support your exit strategy.
