ETASSUM51060 | Enterprise Management Incentives (EMI): General requirements: Maximum company limit

Paragraph 7, Schedule 5 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA)

Overview

From 6 April 2026, the total Unrestricted Market Value (UMV) of shares under EMI options granted by a company must not exceed:

• £6 million, or

• £3 million – where the employer company is a Specified Company.

This limit applies to unexercised qualifying EMI options at any time.

The limit for options granted prior to 6 April 2026, remains £3 million for all companies.

Group Company Situations

Where EMI options are granted at the same time to:

• Employees of a Specified Company, and

• Employees of a Non-Specified Company,

and this causes the £3m limit to be exceeded:

• For the purposes of paragraph 7, the options granted to employees of the Specified Company are treated as having been granted before the other options.

• This ensures priority is given to the options granted to employees of the Specified Company when applying the £3m limit.

Example

The UMV of shares under existing unexercised EMI options already granted by a parent company is £2.5 million.

On 6 April 2026:

• Options are granted to employees of a Specified Company subsidiary, with a UMV of £500,000.

• Options are granted to employees of a Non-Specified Company subsidiary, with a UMV of £1m.

Calculation:

For the purpose of paragraph 7, the Specified Company options are treated as granted first:

• Meaning that at the time of grant, the £3 million limit is met - £2.5m + £500,000 = £3m.

The Non-Specified Company options also qualify under the higher £6m limit:

• £3m + £1m = £4m (within £6m cap).

Exceeding the Limit

If an option is granted that causes this limit to be exceeded, the option is not a qualifying EMI option as to the excess.

If more than one option is granted at the same time which causes the limit to be exceeded, the non-qualifying excess is divided amongst the options pro rata.