Employee Share Scheme Changes: CSOP Becomes EMI2

Employee share schemes: more flexibility for businesses from April 2027

Businesses will have greater scope to use tax-advantaged employee share schemes to attract, retain and reward key people following changes announced to the Company Share Option Plan (CSOP).

From 6 April 2027, the individual CSOP option limit is set to double from £60,000 to £120,000, while the maximum exercise period will increase from 10 to 15 years. CSOP is also being rebranded as EMI2, although the CSOP name will be retained in legislation.

What is changing?

One important change is that EMI2/CSOP options will no longer count towards an employee's Enterprise Management Incentive (EMI) option limit. This means the two schemes can operate independently, potentially allowing businesses considerably more flexibility when structuring employee share incentives.

The maximum period for exercising EMI2 options while retaining the relevant tax advantages will also increase from 10 to 15 years. The announced changes are due to take effect from 6 April 2027 through Finance Bill 2026-27.

There are further changes affecting Enterprise Management Incentive schemes. Employees affected by an EMI disqualifying event will have 180 days rather than 90 days to exercise their options. The EMI rules relating to companies moving towards Employee Ownership Trust ownership are also being extended.

The period for certain tax-advantaged and non-tax-advantaged shares and share options reserved by third parties to be excluded from the disguised remuneration rules is also being extended to 15 years.

What does this mean for employers?

For growing businesses, the changes could make employee share options a more useful part of a wider remuneration and succession strategy.

The higher £120,000 EMI2 limit and longer exercise period give employers more room to structure incentives around their longer-term plans, while the separation of the EMI and EMI2 limits could provide additional flexibility where employees participate in both arrangements.

But a share scheme should not be considered in isolation. Eligibility, tax treatment and the commercial objectives behind the arrangement all matter.

If you're considering an employee share scheme, reviewing an existing arrangement or looking at how incentives fit into your wider plans, our Business and Tax Advisory team can help you understand the options and structure them around your business objectives. 

Call us now on 01380 723692 or email us here.