EMI is the most tax-advantaged share option scheme available to UK companies — and from 6 April 2026 it got dramatically bigger: fewer than 500 full-time-equivalent employees (up from 250), gross assets up to £120 million (up from £30 million), a £6 million company option pool (up from £3 million), and a 15-year exercise window (up from 10). The individual limit stays at £250,000 per employee. The catch for fintech: EMI carries the same excluded-activities test as SEIS and EIS — a trade consisting substantially of banking, insurance, money-lending or other financial activities doesn’t qualify, and drifting into one after granting options is a disqualifying event.
Why EMI matters more in fintech than anywhere else
Fintech startups hire against two of the best-paying employers in the economy: banks and big tech. You won’t win on salary. EMI is how you compete — options granted at an HMRC-agreed valuation, with no income tax or National Insurance on exercise, and gains taxed as capital rather than employment income. For the employee, the difference between an unapproved option and an EMI option on the same exit can be the difference between roughly 47% marginal tax and CGT at 24% — or 18% with Business Asset Disposal Relief.
What changed on 6 April 2026
| Limit | Before 6 April 2026 | Now |
|---|---|---|
| Employees | Fewer than 250 FTE | Fewer than 500 FTE |
| Gross assets | £30m | £120m |
| Company option pool (valued at grant) | £3m | £6m |
| Exercise window | 10 years | 15 years |
| Individual limit | £250,000 over 3 years | £250,000 (unchanged) |
The expanded limits also apply to existing unexercised options, and existing option agreements can be amended to the 15-year window without losing tax-advantaged status (properly documented). From April 2027, the separate requirement to notify HMRC of each grant is abolished — until then, grants must still be notified by 6 July following the end of the tax year, and annual ERS returns continue throughout.
Scale-ups that outgrew EMI and settled for CSOP or unapproved options should reassess — a company with 300 staff or £60m of assets is back in scope.
The fintech catch — qualifying trade, again
EMI eligibility requires a qualifying trade, tested with substantially the same excluded-activities list as SEIS and EIS: banking, insurance, money-lending, debt factoring, hire-purchase financing and other financial activities must not form a substantial part of the trade. A fintech that qualifies for SEIS/EIS will usually qualify for EMI on the trade test, and one that doesn’t, won’t. The full business-model analysis is in our SEIS and EIS for fintech guide — the same logic applies here.
The tax treatment for 2026/27
- At grant: no tax
- At exercise: no income tax or NIC, provided the exercise price is at least the market value agreed with HMRC at grant (a discounted strike creates an income tax charge on the discount)
- At sale: CGT at 24% (higher-rate, 2026/27) on the gain — or 18% under Business Asset Disposal Relief, which EMI shares access on privileged terms: no 5% shareholding requirement, with the two-year qualifying period running from the grant of the option, not the acquisition of the shares
- For the company: a Corporation Tax deduction on exercise for the gain delivered to the employee
Setting EMI up properly
- Valuation: agree the share valuation with HMRC (VAL231) before granting — this fixes the strike price floor and is what makes the whole structure defensible
- Eligibility at every grant: the company conditions (independence, assets, headcount, qualifying trade) and the employee conditions (25 hours/week or 75% of working time, under 30% existing ownership) are tested at each grant date, not once
- Paperwork discipline: working-time declarations, board approvals, option agreements consistent with the plan, notification by 6 July (until April 2027), ERS annual returns
- Fintech extras: if you hold FCA permissions, keep the option plan consistent with any regulatory remuneration expectations, and revisit the qualifying-trade position whenever the product roadmap moves toward principal risk
AccTek handles the valuation preparation, scheme design and the compliance calendar as part of our fintech accounting service.
EMI options for fintech FAQs
Do fintech companies qualify for EMI share options?
Usually — if the trade qualifies. EMI applies substantially the same excluded-activities test as SEIS and EIS: banking, insurance, money-lending and other financial activities must not form a substantial part of the trade. Fee-based software and processing businesses generally qualify; lenders and underwriters generally don't. The company must also be independent, with under £120 million gross assets and fewer than 500 full-time-equivalent employees (limits from 6 April 2026).
What happens to EMI options if the company pivots into lending?
A trade becoming substantially excluded is a disqualifying event. Option holders have 90 days from the event to exercise and preserve full EMI tax treatment; value growth after that window loses the EMI advantages. A pivot into balance-sheet lending should therefore be assessed for its cap-table impact as well as its regulatory one.
What are the EMI limits from April 2026?
From 6 April 2026: fewer than 500 full-time-equivalent employees, gross assets up to £120 million, a company-wide option pool of £6 million valued at grant, and a 15-year exercise window. The individual limit remains £250,000 per employee over three years. The expanded limits also apply to existing unexercised options.
Do employees pay tax when exercising EMI options?
Not income tax or National Insurance, provided the exercise price is at least the HMRC-agreed market value at grant. Tax arises on sale instead, as capital gains — at 24% for higher-rate taxpayers in 2026/27, or 18% where Business Asset Disposal Relief applies, with EMI's two-year BADR clock running from the grant of the option.
Do we still need to notify HMRC when we grant EMI options?
Yes, for now — grants must be notified by 6 July following the end of the tax year in which they're made. From April 2027 the separate grant notification is abolished for registered schemes, with grant information moving into the annual ERS return instead. Annual ERS returns are required throughout either way.
Godwin Pinto ACA (ICAI) is the founder of AccTek and a member of ICPA, with 20+ years of experience in accounting and tax for contractors, startups and SMEs. Previously at PwC.
Official guidance: HMRC’s EMI rules are at Enterprise Management Incentives on GOV.UK, with detailed treatment in the Employee Tax Advantaged Share Scheme User Manual. AccTek Ltd is an independent accountancy practice and is not affiliated with HMRC or GOV.UK. This guide is general information based on 2026/27 rules, not advice on your company’s specific position.
You can’t outbid the banks. You can out-equity them.
Valuation preparation, scheme design, grant paperwork and the compliance calendar — EMI done properly, with the fintech qualifying-trade question answered first.
