Keep the people who make your R&D succeed.

An EMI is a tax-advantaged employee share option scheme. HMRC lists it among the schemes that can give tax advantages to employees and employers. The company grants options over its shares to chosen employees, who can later buy the shares at the agreed price. For R&D businesses it is a way to give key technical staff a stake in the company's growth.

HMRC says the gross assets limit is 120 million pounds or less, up from 30 million before 6 April 2026, and the company must have fewer than 500 full-time employees, up from 250. Paragraph 12 of Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 contains the gross assets limit. Specified Northern Ireland companies have a lower asset figure.

Paragraph 7 of Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003, as amended by the Finance Act 2026 with effect from 6 April 2026, caps the total value of shares under unexercised qualifying options at 6 million pounds. The cap is 3 million pounds where the employer is a specified Northern Ireland company. Past grants count towards the cap, so we advise keeping a clear option register.

HMRC's guidance says the individual limit is options worth up to 250,000 pounds in any three-year period. If you want to reward a senior engineer or technical lead with a large grant, it is the individual limit that is likely to matter, so your advisers should check the value at grant.

HMRC says the employee must work at least 25 hours a week or 75% of their total working time for the company. That condition affects part-time researchers and people with other roles. It is one of several tests, so a lawyer or tax adviser should confirm eligibility person by person before options are granted to your technical team.

HMRC's page lists banking, farming, property development, provision of legal services and ship building as excluded activities. It does not otherwise define a qualifying trade on that page, so the full rules sit elsewhere. If your company has a mix of activities, the excluded ones can matter, and the point should be raised with your advisers early.

It can be one tool for retaining skilled staff whose time on R&D forms part of your qualifying costs. HMRC's cost guidance covers salaries, wages, bonuses, pension contributions and employer National Insurance for time spent on R&D. Share options are a different matter. We can help you consider the interaction, and we coordinate with your advisers where appropriate.

HMRC's page sets out the limits as they apply from 6 April 2026, and the legislation was amended with effect from that date. Commentary differs on how far the higher limits reach existing options, and we have not verified that point on a government source. Ask a specialist adviser about the status of any options you granted earlier.

An option grant is not one of the cost categories HMRC lists for R&D tax relief, such as salaries, wages, bonuses, pension contributions, employer Class 1 National Insurance, consumables and software. We check how any share-based payments are recorded in your accounts, so that the staff costs in your claim are right. Accounting for options is for your accountant.

A cash bonus is a cost in the year it is paid, while options reward growth in the value of the company and give employees a stake. Whether EMI is the better route depends on tax, valuation, cash flow and your plans for the company. That is for your tax and legal advisers. We can help you consider how it fits with your R&D claim.