Keeping Options Open
Today we’ve published Keeping Options Open: The Case for EMI Reform, a new report revealing that the UK’s Enterprise Management Incentive (EMI) scheme — once a global leader in startup equity incentives — is now falling behind, putting employees and growing companies at risk.
82% of employers surveyed agreed EMI was a powerful tool for hiring top talent; 85% of employers said it was critical to retaining talent; and 92% of employers agreed that “EMI options are a meaningful motivator for our employees.”
When asked what would improve how EMI worked for their business, 74% of respondents wanted firms that have raised over £30m to be able to continue to use the scheme. Additionally, 70% of respondents told us that they strongly agree that “The UK startup ecosystem would benefit if the EMI scheme’s time to expiry was extended beyond the current 10 years,” with 81% in agreement overall. 76% said “adding flexibility for the Board to allow employees to exercise their shares at occasions not already included in share agreements.”
These results give some indication of just how important EMI is to UK startups; however, the simple truth is that today fewer and fewer founders are able to offer this to potential hires. The number of UK companies raising at least £30m in a single year has risen sharply – up 375% between 2014 and 2024 – meaning promising startups can inadvertently exceed EMI thresholds simply by closing a major funding round or rapidly hiring to support growth.”
EMI has been one of the UK’s most effective tools for helping startups attract and retain world-class talent. For over two decades, it has enabled high-growth companies to compete with larger corporates for skilled employees, rewarding those who take a risk on building something new while driving wider economic growth.
However, our report shows that the scheme’s design has not kept pace with the realities of modern scaling companies. Caps on gross assets and employee numbers were set many years ago and have never been updated — despite larger funding rounds, faster growth trajectories, and changing paths to liquidity for today’s startups.
As a result, many firms lose EMI eligibility just as they begin to scale globally, weakening their ability to attract and retain the talent they need to succeed.
Our report calls for:
Government to increase the current limits of EMI from a £30M asset capitalisation to £150m and from 250 to 1000 employees.
Extend the EMI exercise window to 15 years
Allow Board discretion to extend exercise opportunities to employees when other shareholders access liquidity, without jeopardizing EMI qualification.
Introduce a new “EMI Growth” or “EMI Plus” tier specifically designed for companies that have outgrown traditional EMI thresholds but still need equity incentive tools to compete for talent.
HMRC to review their website for ways to simplify the application and compliance process.
These recommendations should be applied to current EMI option grants, not just future ones.