The UK government has set out plans to double the individual limit under its Company Share Option Plan to £120,000 from 6 April 2027, as part of employee-share reforms relevant to startups growing beyond the smaller Enterprise Management Incentives scheme. HM Revenue and Customs published the proposals on 28 October, alongside guidance introducing EMI2 as the new public name for CSOP.
The naming change starts immediately, but the higher limit does not. HMRC says CSOP will remain the name used in legislation. The financial and operational changes are planned through Finance Bill 2026-27, making this an announcement of proposed rules for next April rather than a larger allowance employees can already use.
A second route as companies grow
EMI is aimed at eligible small, high-growth businesses seeking to recruit and retain staff. EMI2 has a wider reach: companies of any size and in any sector can generally offer it. HMRC describes it as a scheme that can operate alongside EMI, serve companies that outgrow EMI eligibility or cover businesses whose activities exclude them from EMI.
The proposed £120,000 ceiling is twice the current £60,000 CSOP limit. HMRC also plans to remove the interaction between the two individual limits, so CSOP options granted would no longer count towards an employee's EMI option limit. The policy paper says new CSOP grants within the increased limit from 6 April 2027 would not affect existing EMI options.
These are employee remuneration measures, not the investor tax-relief changes in the separately announced SEIS, EIS and VCT package. They also differ from the proposed Founders' Relief for qualifying capital gains. Each measure has its own conditions and timetable; one announcement does not establish eligibility for the others.
Longer periods, with transition conditions
The maximum period for exercising CSOP options while retaining tax advantages would rise from 10 years to 15 years. Existing agreements could also benefit, but HMRC says agreements made before 6 April 2027 would need to be amended in line with the legislation. The announcement is not an automatic extension of every employee's contract.
Another change concerns EMI options after a disqualifying event. The window would increase from 90 days to 180 days. Older option agreements could use the longer window only where the disqualifying event occurs on or after 6 April 2027, according to the HMRC policy paper. That date condition matters separately from when an option was originally granted.
The package would also extend the existing Employee Ownership Trust exception in EMI rules. Companies arranging on or after 6 April 2027 to become controlled by such a trust could continue granting qualifying EMI options. For certain shares and options reserved by third parties, the period covered by exceptions to disguised remuneration rules would increase from 10 to 15 years, including existing unexercised agreements.
What the announcement does not change today
An option is a right to buy shares later at a price agreed when it is granted. It is not an immediate cash payment. HMRC's accompanying guidance says both schemes are discretionary: a company decides which eligible employees receive options. Tax advantages depend on the relevant conditions, and selling shares may still create a Capital Gains Tax liability.
Under the present EMI eligibility limits, most qualifying companies must have assets no greater than £120 million and fewer than 500 full-time employees. Those thresholds were already in place before this announcement. Employees must meet the relevant employment, ownership-interest and working-time conditions; the new EMI2 name does not remove those requirements from EMI.
HMRC estimates that the higher CSOP limit and removal of its interaction with EMI would benefit about 36,000 employees between 2027-28 and 2031-32. It estimates around 6,000 would benefit from the longer CSOP exercise period and about 950 from the EMI disqualifying-event change. These are forecasts for different measures, not confirmed beneficiaries or numbers that should simply be added together.
For employers, HMRC anticipates initial familiarisation, software, training and legal costs. Companies extending existing CSOP agreements may need to retain records for longer. The next step is legislation and implementation ahead of April 2027; businesses and employees remain subject to current rules until the relevant changes take effect.
Contains public sector information licensed under the Open Government Licence v3.0.
