Autumn Budget 2026: Share option schemes widen for growing businesses

Attracting and keeping key people remains one of the biggest challenges for growing businesses. Tax-advantaged share option schemes are an effective way to share future success with employees. From 6 April 2027, Budget 2026 changes will widen how businesses can use them.

What is changing for Enterprise Management Incentives?

If a disqualifying event occurs, such as a change that means the company no longer meets the Enterprise Management Incentives (EMI) conditions, option holders will have 180 days to exercise their options and keep the tax benefits. At present, they have 90 days. The longer window gives employees more time to arrange funding and gives companies more room to manage restructurings without rushing decisions.

The existing exception for companies controlled by an Employee Ownership Trust (EOT) will also be extended to companies that are arranging to become EOT-controlled.

Why does the EOT change matter for business owners?

For owners planning succession through an EOT, this removes uncertainty over whether the change of control would put EMI options at risk. An EOT sale often depends on the commitment of the management team who will lead the business afterwards. Being able to reward those people during the transition should make succession planning more straightforward.

What is EMI2 and who could benefit?

The Government also announced EMI2. This is in effect a rebrand of the Company Share Option Plan (CSOP), with improvements that bring it closer to EMI. The value of options that can be granted to each employee will double from £60,000 to £120,000. Options can also remain unexercised for 15 years rather than 10 while keeping their tax advantages.

This is most relevant to companies that have outgrown EMI or whose trade falls outside its rules. Such businesses have often found CSOP too limited to make a real difference to senior hires, so EMI2 offers a more credible way to reward people over the long term.

Looking ahead

Companies with EMI schemes should check how the longer exercise window affects their option agreements. Those that previously ruled out share options may want to take another look at EMI2. Owners exploring employee ownership should consider how option schemes fit their succession timeline.

With competition for talent unlikely to ease, it could be worth reviewing how share ownership fits into reward and succession plans before April 2027.

Armstrong Watson is hosting a live webinar on Tuesday, 3rd November, at 9.30am. Join us to hear from our specialists in tax, financial services and accounting who will be examining the announcements and their impact.

To register for the webinar please visit https://armstrongwatson.info/47JlHMY.