How EMI schemes attract and retain top creative talent

Enterprise Management Incentive (EMI) schemes are widely adopted by some of the most successful creative businesses in the UK to attract, retain and motivate top talent. And in a sector where competition for that talent is tough, creative businesses that do not offer staff share schemes face losing out.

An EMI scheme allows a qualifying business to grant share options to employees in a highly tax-efficient way, aligning staff with the long-term success of the business.

EMI schemes have historically been only available to creative businesses with fewer than 250 employees and with gross assets that do not exceed £30 million.

Perhaps in recognition of their importance, the Government in its Autumn 2025 Budget announced significant changes. From April 2026, EMIs will now be open to businesses with fewer than 500 employees and with gross assets that do not exceed £120 million. The exercise period has also been extended from 10 to 15 years.

These changes open up EMI schemes to a considerably larger number of creative and media businesses.

Setting up an EMI scheme: What do employers need to know

There are many ways a creative business can reward staff – from cash bonuses to the direct giving of shares. But EMI schemes stand apart for their favourable tax treatment for both the employer and the employee.

That tax treatment means they are complex to create and need careful planning to ensure the tax treatment is preserved. Here are four key points to keep in mind.

1. Confirm eligibility

Both the company and the employees must qualify. The company must be independent, carry on a qualifying trade, and stay within the relevant limits on gross assets, employee numbers and option values. Employees must work at least 25 hours per week (or 75% of their working time) for the business and must not already own more than 30% of the company.

Many employers seek advance assurance from HMRC before granting options to confirm that the company qualifies.

2. Agree share valuations and option terms

Before options are granted, the company will need to agree the market value of the shares with HMRC. This valuation underpins the tax treatment: if the exercise price is set at or above the agreed market value, employees should not face Income Tax or National Insurance Contributions (NICs) when they exercise the options.

Employers also need to carefully design the option terms, including vesting schedules, leaver provisions, performance conditions and what happens on a sale or exit.

3. Draft documentation

An EMI scheme requires formal documentation including option agreement(s), share plan rules and board and shareholder approvals.

These documents must comply with EMI legislation and reflect the commercial intentions of the business.

4. Registration and ongoing compliance

Once options are granted, the company must register the EMI scheme with HMRC and submit annual returns detailing option activity. Although administrative requirements are being simplified, ongoing compliance remains essential to preserve the scheme’s tax advantages.

Why employees value EMI options

For employees, EMI schemes offer a rare opportunity to share directly in the growth of the business on exceptionally favourable tax terms.

Provided the scheme is structured correctly, employees will not pay Income Tax or NICs when shares options are granted or exercised. Capital Gains Tax is typically then paid when the underlying shares are sold and often at lower rates than Income Tax, especially when Business Asset Disposal Relief (BADR) is available. EMI options have special relaxations that make BADR more widely available.

The company will also receive a tax deduction based on the market value of the shares issued to employees who are exercising their options.

This makes EMI options one of the most tax-efficient forms of employee reward available in the UK.

Importantly, employees are no longer just staff – they become stakeholders. Their financial upside grows as the company grows, encouraging long-term commitment, higher engagement and stronger alignment with the company’s strategic goals.

In creative businesses, where salaries and cash bonuses may be limited, EMI options provide a powerful form of deferred reward. Employees who help build value over time can participate meaningfully in exit events such as trade sales or investment rounds, often generating life-changing returns.

For senior creatives, producers, developers and leaders, participation in an EMI scheme can materially improve total compensation without increasing immediate salary costs for the business, making EMI schemes a compelling tool in a competitive talent market.

How Kreston Reeves can help

We have a specialist share scheme team who will work with you to design and implement a share scheme that meets your strategic goals, ensuring that the scheme is as tax efficient as possible for both the company and the employee. If you would like assistance with this, please do get in touch.