Budget day for growth companies. Will EMI finally deliver for the investor generation?

When the Chancellor stands up this Wednesday on Budget day, most founders, CFOs and HRDs will be braced for bad news: poor GDP growth, frozen thresholds, reduced reliefs, more taxes dressed up as “stability”.

But quietly there is one rumor that should make growth companies sit up: a potential uplift to Enterprise Management Incentive (EMI) limits, coupled with an increase to the current £30m gross asset test.

Nothing is confirmed until after the Chancellor's speech and the detail will matter. But if she does move in that direction, this is more than a technical tweak for tax specialists. It is a chance to hardwire real ownership for younger workers - particularly Gen Z - at exactly the moment they are becoming serious investors.

Why EMI still matters

Despite its technical reputation, EMI is fundamentally simple: it enables employees to share in the equity value they help create, with the tax system designed to shift as much of that upside as possible into capital gains tax.

Currently, EMI qualification and participation is restricted by certain key limits and thresholds:

If the Budget rumours prove true and these limits and thresholds are raised, founders and finance teams will gain valuable headroom to recruit and retain talent, without resorting to less tax-efficient or more complex equity arrangements.

But I think the more interesting question is what will employers really do with that extra capacity?

Gen Z are already investors -  just not in you

Over the past five years, younger workers have quietly changed how they think about money.

Opening an investment account now takes minutes on their phone.

Fractional shares and low-cost platforms have stripped out the old frictions of paper forms and minimum ticket sizes.

A rapidly growing proportion of 18-34 year-olds now invest regularly, often in global index funds and US tech.

This shift didn't happen in a vacuum. It's the product of an economic backdrop that shaped their outlook.

Gen Z’s financial habits have been formed in quite a harsh environment:

• The 2008 financial crisis landing during their formative years.
• Austerity, Brexit uncertainty and Covid.
• Stagnant wages alongside rising house prices and student debt.
• A cost of living squeeze that has eaten into disposable pay.

They have drawn a clear conclusion that you do not build security from salary alone. You build it by owning assets, more specifically, equity, because housing is a complete non-starter.

For many, trading apps have become the last accessible lever where the future can still be shaped. If the traditional path - degree, job, house - feels blocked, an equity investment account is the remaining route to agency.

That sits uncomfortably alongside the way many employers still talk about equity. Too often, share plans are positioned as a niche, opaque perk, explained in dense slides and legalistic language, with most of the real value concentrated at the top.

Your younger employees are already behaving like investors. The question is whether they will ever become investors in you.

EMI as the bridge from trading app to workplace ownership

If the Budget does increase the various EMI limits and thresholds, it gives employers permission to do something they should arguably have been doing anyway: use EMI as the primary ownership route for the next generation of talent, not just a tax wrapper for the existing senior team.

Three points are worth drawing out:

1. Bigger EMI headroom = meaningful stakes, earlier in their career

If the individual £250,000 cap is increased by a genuine multiple, EMI stops being something you can only use meaningfully for a handful of senior executives.

You can:

• Build clear EMI “bands” for analysts, engineers, managers and directors.
• Set out how an individual’s equity stake can grow as their role and impact grow.
• Award pay packages that, in a good outcome, could realistically move the dial on a house deposit, not just to buy a new laptop. 

For a 27-year-old who is already drip-feeding into an ETF on their phone, that is the difference between a “nice benefit” and a serious reason to commit to your business over the medium term.

The discipline is to avoid using all the extra capacity simply to retrofit larger grants for existing executives. If only the founding team and C-suite have meaningful EMI stakes, you are potentially missing a trick.

2. Lifting the £30m gross asset test keeps high growth firms in the game

The current £30m gross asset test routinely catches successful scale-ups earlier than you might expect. A strong funding round or capex-heavy strategy can push a business over the line while it still feels culturally like a start-up.

The result is a cliff edge:

• Early joiners, often in their twenties, enjoy EMI protection.
• Later cohorts - who may be just as critical to the next phase of growth - are pushed into less generous, unapproved equity.

Raising the threshold would allow more mid-market and later-stage growth companies, to keep using EMI as their core employee equity vehicle. For example:

• Gen Z and millennial hires can be brought in on the same footing as earlier cohorts.
• The organisation can run a coherent ownership strategy rather than patchwork schemes.
• Equity remains something that is offered, not something people just read about in old option agreements.

3. EMI fits naturally into Gen Z's personal financial mix

Positioned correctly, EMI can be explained in exactly the language younger workers already use about their portfolios:

• An equity option over the business they help to build.
• Asymmetric upside (participating in future growth) and limited cash outlay.
• A tax regime that aims to deliver capital gains treatment on success.

It becomes the high-octane bit of their financial life and wealth stack:

That is a much more compelling narrative than a generic “long-term incentive alignment” message.

A parting thought for employers

From a policy perspective, a more generous EMI regime would:

• Support UK growth companies in attracting and retaining talent.
• Channel more equity participation into domestic, productive businesses.
• Give younger workers a route to build wealth from something other than inherited property.

If the rumours become reality, the technical details will keep tax teams (like mine) busy. The real question for leadership, though, is simpler: will you use any extra EMI capacity just to tidy up your cap table or will you use it to ensure that the investor generation already in your workforce can own a meaningful part of the company they are building, not just a basket of US tech stocks on their phones?

That is the opportunity this Budget may quietly put on the table.

At Burges Salmon, we help growth companies and their leadership teams navigate the evolving landscape of employee incentives. If you’d like to discuss how the Budget changes could impact your EMI strategy or how to make equity participation a genuine lever for attracting and retaining the next generation of talent, we’d be delighted to talk.