Changes coming from April 2027
The government has announced a package of changes to the Company Share Option Plan (CSOP) and Enterprise Management Incentives (EMI) scheme, intended to make tax-advantaged employee share schemes more flexible and attractive to businesses and their employees. The changes will be legislated for in Finance Bill 2026–27 and will generally take effect from 6 April 2027.
Under the CSOP, the individual limit on the value of share options that an employee can hold will double, from £60,000 to £120,000. The interaction between the CSOP and EMI individual option limits will also be removed, allowing employees to benefit from the two schemes without the existing interaction between their respective limits. In addition, the CSOP exercise period will be extended to 15 years, giving employees greater flexibility over when they exercise their options.
The changes will also extend to certain shares and share options reserved by third parties. The period during which certain tax-advantaged and non-tax-advantaged shares and share options can be excepted from the disguised remuneration rules will be extended to 15 years.
For EMI, the exception relating to Employee Ownership Trusts (EOTs) will be extended to companies that are arranging to become controlled by an EOT. The exercise window following a disqualifying event will also increase to 180 days, providing employees with a longer period in which to exercise their options following circumstances that would otherwise affect the tax advantages of the scheme.
A further administrative change will simplify the process for notifying EMI option grants to HMRC. Currently, companies must submit a separate notification of the grant of an EMI option. For options granted on or after 6 April 2027, this separate notification requirement will be removed. Instead, the company will be required to report the grant through its end of year return.
These changes are intended to make employee share schemes more accessible and flexible, while reducing administrative burdens for employers. Companies operating CSOP or EMI arrangements should review their existing share option plans and consider whether the extended limits and exercise periods could benefit their employees. They should also ensure that their procedures for reporting EMI option grants are updated ahead of April 2027.
