Wage costs are rising: can EMI share options help you keep key staff?

With the National Living Wage confirmed in the Autumn Budget 2026 to rise by 3.9% to £13.21 an hour from 1 April 2027, many employers face further increases in payroll costs. This will increase cashflow pressures on many businesses that need to attract and retain good people.

Against that backdrop, share incentives can be an effective way to recruit, retain and motivate employees. By giving key people a stake in future growth, businesses can offer meaningful long-term reward without the immediate cash outlay of higher salaries or cash bonuses. Vesting and performance conditions can also tie that reward to retention and the delivery of longer-term business objectives.

Enterprise Management Incentive (EMI) share options became available to a much wider range of companies from 6 April 2026, following changes announced at the Autumn Budget 2025. The gross assets limit increased from £30m to £120m, the employee limit from 250 to 500 and the overall company option limit from £3m to £6m. This means that, while conventional pay is becoming more expensive, many growing businesses that previously fell outside EMI may now be able to use a highly tax-advantaged equity incentive to compete for and retain talent.

The Autumn Budget 2026 has announced further measures in respect of EMI from 6 April 2027, removing interaction between EMI and Company Share Option Plan (CSOP) individual option limits to allow more value to fall under the arrangements, extending the exception for Employee Ownership Trusts (EOTs) in the EMI rules to companies arranging to become controlled by an EOT, and increasing the period for which EMI tax advantages may be retained following certain disqualifying events from 90 days to 180 days.

In addition, the Autumn Budget 2026 announced a re-branding of CSOP as ‘EMI2’ with expanded generosity from 6 April 2027. EMI2 will double the value of tax-advantaged options each employee can hold from £60,000 to £120,000, and increase the tax advantaged exercise period from 10 years to 15 years. CSOP’s have been the main tax-advantaged share incentive alternative for companies that do not qualify for EMI, so the higher limits give relevant businesses a more generous way to reward senior and key employees.

To discuss whether EMI or another share scheme suits your business, you can contact our Tax team using the form below.