CSOP limit doubles to £120,000; EMI window extends to 180 days

Employees holding Company Share Option Plan options face a higher ceiling from 6 April 2027.GOV From that date the individual limit, measured by market value at grant, will riseGOV from £60,000GOV to £120,000GOV. From the same date CSOP options will no longer count towards the £250,000 Enterprise Management Incentives individual limitGOV, so staff will be able to hold CSOP awards alongside EMI awards, including existing EMI holdings, without one reducing headroom under the other.GOV

From 6 April 2027 the maximum CSOP exercise period will lengthenGOV from 10 years to 15 yearsGOV, aligning CSOP with EMI. Options granted on or after 6 April 2027 will be able to carry a term of up to 15 years.GOV Agreements already in existence before that date will be able to be amended to use the longer maximum without losing the scheme's tax advantages, provided the amendment is in line with the legislation.GOV Separately, from 28 October 2026 CSOP will also be branded Enterprise Management Incentives 2 (EMI2)GOV, reflecting its role as a complement to EMI and a follow-on for companies that have outgrown EMI; the statutory scheme name remains Company Share Option Plan.

Enterprise Management Incentives rules will also ease from 6 April 2027. Where arrangements are in place for the company to become controlled by an Employee Ownership Trust, the EMI independence exception will cover the transition periodGOV, so a company arranging on or after that date to become Employee Ownership Trust-owned will be able to continue to grant qualifying EMI options.GOV For disqualifying events occurring on or after 6 April 2027, the window to exercise and keep EMI tax advantages will extendGOV from 90 days to 180 daysGOV. The longer window will also apply to agreements already in existence, where the disqualifying event itself occurs on or after 6 April 2027.GOV The separate notification of each EMI grant will end for options granted on or after 6 April 2027GOV; the company will instead notify the grant through the EMI annual return.

From 6 April 2027 the period for the third-party earmarking exceptions, which prevent an early Income Tax charge where shares are set aside for an employee, will extendGOV from 10 years to 15 years from grantGOV. The longer period will also cover unexercised share and option agreements already in existence before 6 April 2027.GOV Business Asset Disposal Relief, which taxes qualifying gains at 18% within a £1 million lifetime limit, will keep that rate but the lifetime limit will fall to £500,000GOV for qualifying disposals from 6 April 2027GOV, a cut that can affect employees disposing of EMI shares whose gains exceed the new limit.

On stamp taxes, the draft legislation replacing Stamp Duty and Stamp Duty Reserve Tax with a securities transfer tax from late 2027GOV has been amended after consultation on employee share schemesGOV. The £1,000-or-below de minimis for non-electronic transactions will be retainedGOV, the employer will report and pay the tax rather than the employeeGOV, and an employer payment will not result in an Income Tax liability for the employeeGOV. The tax will be legislated in Finance Bill 2026-27GOV and commenced by order in late 2027GOV. The summary of responses on modernising distributions and purchase of own shares has been published; the government will develop detailed proposals and engage stakeholders in early 2027, recognising the potential effect on holders of tax-advantaged employee shares.

Legal basis: Employment Related Securities Bulletin 69 announcing Finance Bill 2026-27 changes to the Income Tax (Earnings and Pensions) Act 2003 CSOP and EMI codes, Business Asset Disposal Relief and the securities transfer tax.GOV