Autumn Budget 2026: What the CSOP and EMI changes mean for businesses

The Autumn Budget 2026 expands the Company Share Option Plan (CSOP) and Enterprise Management Incentives (EMI) regimes from 6 April 2027. The changes will allow qualifying businesses to offer larger tax-advantaged option packages, provide more time to exercise certain options and reduce some of the administrative burden of operating an EMI scheme.

For employers using or considering share incentives the key takeaway is that the changes provide far greater flexibility to use tax-advantaged share options to attract, retain and incentivise key talent.

What is changing under the Company Share Option Plan?

Rebranded EMI2

CSOP has been rebranded as “EMI2”, reflecting the UK Government’s intention that it should complement EMI and provide a successor scheme for companies that have outgrown the EMI regime. However, it will continue to be known as CSOP in legislation.

Increased limits for EMI2 grants

From 6 April 2027, the maximum value of shares over which an employee may hold EMI2 options will double from £60,000 to £120,000. The limit is calculated using the unrestricted market value of the shares on the date the options are granted.

This increase should make EMI2 a more meaningful part of a company’s remuneration and retention strategy by offering a more significant equity stake to incentivise key employees.

Interaction with EMI options

Of even greater significance is the removal of the current interaction between the £250,000 EMI individual limit and the EMI2 limit, which effectively limits the combined options under both schemes to £250,000 at present.

From April 2027, employees will be able to hold up to £250,000 of EMI options and £120,000 of EMI2 options independently. This will allow a combined maximum of £370,000 of tax-advantaged options, calculated using the market value of the shares when the options are granted.

Removing that interaction should help companies maintain continuity in their employee incentive arrangements as they scale and outgrow the EMI regime.

It may also allow employers to offer a significantly enhanced option package within the tax-advantaged regimes. However, care will be needed where an employee holds options under both schemes, because their conditions and tax treatment are not identical.

Increased exercise periods

The maximum exercise period for EMI2 options will increase from 10 years to 15 years. This brings EMI2 in line with EMI, for which the maximum exercise period increased to 15 years from 6 April 2026.

The longer period will be particularly useful for companies with extended growth or exit strategies and can be applied retrospectively.

Which EMI2 rules are staying the same?

The other key features of EMI2 are generally unchanged. In particular:

Options must still be granted at the unrestricted market value at the date of grant.
Options must generally be held for at least three years before exercise to obtain the favourable tax treatment.

This contrasts with EMI options, which are not subject to a statutory minimum holding period or a requirement to be granted at market value (although an income tax charge can arise if EMI options are granted at a discount). The Budget changes increase the usefulness of EMI2 but does not give the regime all the flexibility available under EMI.

What is changing under Enterprise Management Incentives?

The Autumn Budget 2026 also introduced further changes to EMI, building on the significant reforms announced last year.

Increased exercise period after a disqualifying event

From 6 April 2027, the period in which an employee may exercise an EMI option following a disqualifying event (such as the employee leaving the business) while retaining the associated tax advantages, will double from 90 days to 180 days.

This extended window will give companies and employees more time to respond to a disqualifying event. It should also reduce the risk of employees losing valuable EMI tax treatment simply because an option cannot be exercised within the current 90-day period.

Changes to support EOT sales

The EMI rules will also be amended to support companies transitioning to Employee Ownership Trust (EOT) ownership.

The existing exception to EMI’s independence requirement already permits EMI options to be issued by a company controlled by an EOT. This will be extended to circumstances where arrangements are in place for a company that is not yet EOT-owned to become controlled by an EOT, which will allow qualifying EMI options to continue to be granted during the transition.

EMI reporting requirements simplified

As previously announced, it was confirmed that EMI reporting requirements will be simplified from 6 April 2027. EMI option grants will no longer need to be notified separately to HM Revenue & Customs. Instead, grants will be reportable through the annual EMI end-of-year return.

This should reduce the administrative burden of operating an EMI scheme and bring compliance more closely in line with EMI2. However, employers will still need to ensure that their annual end-of-year returns are completed and submitted on time.

What should employers do now?

Together with the substantial expansion of EMI eligibility limits from April 2026, these changes make tax-advantaged share options accessible to more companies and of greater value to employees. They should also help qualifying businesses to use equity incentives more effectively to attract, retain and reward key employees and reduce the risk of tax advantages being lost because of administrative or timing errors.

Specialist legal and tax advice should be obtained before implementing or amending an EMI or EMI2 share option scheme. To discuss how the Autumn Budget 2026 changes may affect your existing arrangements or future incentive strategy, please contact our Corporate & Business Tax team.