Key takeaways

  • The CSOP individual option limit doubles from £60,000 to £120,000 from 6 April 2027, and CSOP will be known as EMI2.
  • CSOP options will no longer count towards an employee's EMI limit, so employees can hold the full amount under both schemes.
  • The CSOP exercise period extends from 10 to 15 years, and existing CSOP agreements can be amended to benefit.
  • The EMI exercise window after a disqualifying event doubles from 90 to 180 days, and companies moving to employee ownership keep EMI.
  • For EMI options granted from 6 April 2027 there is no separate grant notification. Grants are reported in the year-end return.

Budget 2026 makes the Company Share Option Plan (CSOP) much more useful for growing companies and tidies up several Enterprise Management Incentives (EMI) rules. From 6 April 2027 an employee can hold up to £120,000 of CSOP options on top of their full EMI entitlement, CSOP options can run for 15 years, and EMI option holders get longer to exercise after a disqualifying event. CSOP will be known as EMI2 to show where it fits: as the next step for companies that outgrow EMI or cannot use it.

What was announced

HMRC’s tax information and impact note lists six changes, all taking effect from 6 April 2027:

  • CSOP individual option limit: £60,000 now, £120,000 from 6 April 2027
  • CSOP options counted towards the EMI limit: yes now, no from 6 April 2027
  • Maximum CSOP exercise period: 10 years now, 15 years from 6 April 2027
  • Disguised remuneration exclusion for earmarked shares and options: 10 years now, 15 years from 6 April 2027
  • EMI exercise window after a disqualifying event: 90 days now, 180 days from 6 April 2027
  • EMI independence exception for employee ownership trusts: companies controlled by an EOT now, and also companies arranging to become EOT-controlled from 6 April 2027

Separately, as announced at Budget 2025, companies will no longer need to notify HMRC separately of each EMI option grant for options granted on or after 6 April 2027. Grants will be reported through the existing end-of-year return instead.

How the changes apply to existing options

The note explains how the start date works:

  • the higher CSOP limit and the removal of the EMI interaction apply to options granted on or after 6 April 2027, and new CSOP grants do not affect an employee’s existing EMI options
  • the 15-year CSOP exercise period applies retrospectively, so CSOP agreements in place before 6 April 2027 can be amended to use the longer period without losing tax advantages, provided the amendment is in line with the legislation
  • the 15-year disguised remuneration periods also apply to unexercised share and option agreements made before 6 April 2027
  • the 180-day EMI window applies to existing EMI options where the disqualifying event happens on or after 6 April 2027
  • EMI companies that arrange on or after 6 April 2027 to become controlled by an employee ownership trust can keep granting qualifying EMI options

Why it matters

HMRC’s figures show around 19,730 companies operated CSOP or EMI in 2024-25, with around 4,840 granting EMI options and around 390 granting CSOP options. The government expects the higher CSOP limit and the removal of the EMI interaction to benefit around 36,000 employees and 380 companies between 2027-28 and 2031-32. Renaming CSOP as EMI2 is meant to make the two schemes read as a single offer for companies at different stages of growth.

What it means for accountants and their clients

Revisit share schemes for companies that have outgrown EMI. Companies that no longer qualify for EMI can offer up to £120,000 of tax-advantaged options per employee through CSOP from April 2027. Companies that still qualify can now use both schemes together without one eating into the other.

Review existing CSOP agreements. Where options are approaching their ten-year expiry, the extended 15-year period may be worth adopting by amendment. Take legal advice on the wording so the amendment stays within the legislation.

Update leaver and disqualifying event procedures. The 180-day window gives employees more time to exercise after a disqualifying event on or after 6 April 2027. Option agreements and plan rules may need updating to reflect it.

Simplify EMI grant processes from April 2027. Without a separate grant notification, the end-of-year employment related securities return becomes the reporting point. Make sure grant records are complete and the return is filed on time, because it now carries more weight.

Plan employee ownership transitions. Companies preparing to sell to an employee ownership trust will no longer lose access to EMI during the transition.

Watch the distributions reform. In the separate consultation on company distributions, the government acknowledged that changes to purchase of own shares rules could affect shareholders who acquired shares through EMI, CSOP and other schemes, and said it does not intend to undermine them. See company distributions reform from April 2028.

For founders, the bigger change may be the new Founders’ Relief. Our guide to issuing shares in a private limited company covers the company law basics.

Frequently asked questions

What is EMI2?

It is the new name for the Company Share Option Plan. The government says CSOP will be known as EMI2 to reflect its role as an option for growing companies that have moved beyond EMI or are not eligible for it.

What is the new CSOP limit?

£120,000 per employee for options granted from 6 April 2027, up from £60,000. CSOP options will no longer count towards the employee’s EMI limit.

Can existing CSOP options use the 15-year exercise period?

Yes. The extension applies retrospectively, so existing CSOP agreements can be amended to benefit without losing their tax advantages, provided the change is made in line with the legislation.

Do companies still need to notify HMRC of EMI option grants?

Not separately for options granted on or after 6 April 2027. Those grants will be reported through the company’s end-of-year return.

Sources

Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 28 October 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.