Enterprise Management Incentive schemes: Unlocking growth and talent retention

Why the EMI Scheme matters

The Enterprise Management Incentive (“EMI”) scheme is a UK Government-backed initiative designed to help high-growth businesses attract, retain and reward key talent. It gives employees a chance to share in the company’s success in a tax-efficient and affordable way.

Under the EMI scheme, employees don’t receive shares straight away. Instead, they are granted options – a contractual right to buy shares in the future at a fixed, pre-agreed price. This gives employees meaningful exposure to equity growth without any upfront cost.

Once any agreed conditions are met, for example hitting performance targets or completing a minimum period of service, employees can choose to exercise their options and acquire the shares. If the company performs well and the share value increases, they may then be able to sell those shares at the then current market value for a profit.

This structure offers a number of strategic advantages:

• Aligned interests: Employees become stakeholders – their success is directly tied to the company’s success, driving commitment and loyalty
• Competitive rewards, minimal upfront costs: Share options give the promise of substantial future upside without requiring immediate salary costs.
• Tax-efficiency: The EMI scheme offers favourable tax treatment for both employers and employees.

For ambitious, growth-oriented companies, the EMI scheme is a powerful tool for incentivising and retaining the people who are driving growth.

What’s changed? Key budget updates to the EMI Scheme

In the recent budget announcement, the government expanded the eligibility criteria for the EMI scheme, making it more accessible to a broader class of businesses.

Major changes include:

• Higher gross asset threshold: Increased from £30 million to £100 million.
• Increased employee cap: Raised from 250 to 500 employees.
• Streamlined compliance: Reduced administrative burdens for businesses adopting the scheme.
• Greater flexibility: More room for scale-ups to design incentives that suit their growth stage and structure.

These changes make the EMI scheme a more accessible and attractive option for companies looking to maintain a competitive edge in recruitment and retention.

The impact of EMI expansion

The expansion and simplification of EMI represents a significant benefit to scale-ups and late-stage venture backed businesses. Allowing for more tax attractive senior management reward and greater opportunities for businesses to attract global talent. This change is wholly welcome and represents a commitment from government to drive not just early stage growth.

Edwin Coe’s expertise in growth capital

At Edwin Coe LLP, we have extensive experience in structuring EMI option documents and advising on growth capital transactions. Our team regularly support founders, investors and management teams in implementing effective incentive schemes that are commercially sound and built for long-term success.

We pride ourselves on our depth of expertise across the growth-capital landscape, combining technical knowledge with practical, commercially focused advice.

If you’re considering implementing an incentive scheme or reviewing your existing arrangements, our team would be happy to help. Please get in touch with Jamal Saleh or Sean Bannister to discuss how we can support your growth and reward strategy.