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Good practice Imported

Enterprise Management Incentives — the UK's Targeted Stock-Option Scheme for Small Companies

United Kingdom · London · See the United Kingdom profile · See the London profile

Evidence: Observational / pre–post Top 51% 67/100 · Ask Evidence Copilot about this practice

The Finance Act 2000's EMI scheme lets small UK firms (assets ≤£120m, <500 staff) grant tax-advantaged share options up to £250,000 per employee. HMRC data show usage grew from 16,460 to 18,570 companies since 2021-22, even as recipients per firm fell.

16460 companies
Companies operating EMI (2021-22) (2021-22)
18570 companies
Companies operating EMI (2024-25) (2024-25)
+12.8% %
Growth in companies operating EMI (2021-22 to 2024-25)
+14.7% %
Average option value per employee growth (2021-22 to 2024-25)
~50000 to ~42000 employees
Employees receiving EMI grants (decline) (2021-22 to 2024-25)
250000 GBP
Maximum option value per employee
Enterprise Management Incentives — the UK's Targeted Stock-Option Scheme for Small Companies

Details

Maturity
Established
Promoter
HM Revenue & Customs / UK Government — Finance Act 2000
Period
2000–present
Keywords
employee equity, tax policy, SME competitiveness, talent retention

Context

Enterprise Management Incentives (EMI) were introduced by Schedule 14 of the Finance Act 2000 to help small, high-risk UK trading companies compete with larger firms for talent by offering equity instead of cash.

Objectives

Let qualifying small companies grant tax-advantaged share options to employees to aid recruitment and retention.

Activities

Qualifying companies (gross assets currently up to £120 million, fewer than 500 full-time employees - thresholds raised from £30 million/250 employees before 5 April 2026) can grant options worth up to £250,000 per employee over a rolling three-year period, exercisable within 10-15 years, with no Income Tax or National Insurance due at exercise if shares are bought at market value.

Results

Over 1,000 companies had granted EMI options within a year of launch (by March 2001); by 2015-16, 8,610 UK companies operated the scheme. HMRC's official statistics (updated July 2026) show the number of companies operating EMI rose from 16,460 in 2021-22 to 18,570 in 2024-25 (+12.8%), with average option value per employee climbing from £12,150 to £13,930 (+14.7%). Over the same period, the number of employees actually receiving EMI grants fell from about 50,000 to 42,000.

Conclusions

Company adoption is broadening even as per-company usage narrows to fewer, higher-value grants, typically to leadership and early key hires rather than the whole workforce.

Implementation
Indicative cost
Low (< €50k) — A tax-advantaged scheme with no direct government spending; cost is in foregone Income Tax/NI revenue on qualifying option gains.
Time to results
Long (> 3 years) — In continuous operation since the Finance Act 2000, with eligibility thresholds most recently raised ahead of 5 April 2026.
Staffing & skills
HM Revenue & Customs (scheme administration)

Conditions for success

  • Periodic threshold recalibration (e.g. gross-asset and employee-count limits raised ahead of 5 April 2026) to keep pace with company growth

Common failure modes

  • Individual employee participation has been narrowing even as company adoption grows - grants increasingly concentrated on fewer, higher-value awards to leadership and early key hires rather than the wider workforce

Commonly funded by

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Data sources

Where this practice's information was retrieved from, and when.

Attachments

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