Reward summer update 2026

First, larger companies will be eligible for the EMI scheme further to the increase to the following financial limits.

• The employee limit has increased to 500 employees (from 250). This is the number of group employees including part-time employees and directors calculated on a Full-Time Equivalent basis and excluding employees on maternity or paternity leave or students on vocational training.
• The gross assets limit has increased from £30m to £120m.
• The limit on the total value of shares under unexercised EMI options has increased from £3m to £6m.

All these limits are tested at the date of grant.

The individual financial limit of £250,000 of shares subject to unexercised EMI options (again measured at the date of grant) has not been increased.

These changes are welcome as they will enable scale-ups as well as eligible AIM companies and potentially FTSE small-caps to implement an EMI scheme which is the most tax-advantaged statutory share option scheme.

Second, the maximum period during which EMI qualifying options may be held and exercised whilst keeping EMI tax benefits has increased from 10 to 15 years. The extension to the life of an EMI option will apply to options granted with effect from 6 April and may also apply to existing options granted prior to this date.

There is a statutory variation mechanism for “fixed-date qualifying options”. These are options which are only exercisable on one date, for example an option which is exercisable on the first anniversary of the date of grant or a specific date, such as 31 December 2026.

Provided the statutory conditions are met, a variation to extend the fixed date to a date which is on or before the fifteenth anniversary should not affect the tax-qualifying status of such options.

In practice, fixed-date options are uncommon as most EMI options are exercisable on specified events or over a period of time. However, HMRC’s expectation as stated in their updated guidance, is that in most cases extending the lapse date or exercise period of an existing EMI option can be carried out in accordance with the terms of the option agreement, without impacting the fundamental terms of the option. This is because their view is that this type of amendment does not bring forward when the option is exercisable but rather extends the exercise period. The terms of the EMI scheme documentation will need to be carefully reviewed to determine the position.

It is critical that variations should not alter a fundamental term of the option or HMRC would treat the variation as a surrender of the existing option and the grant of a new option which would jeopardise any accrued employment income tax relief.

None of these changes apply to companies which have their registered office in Northern Ireland and carry on a trade involving either a trade in goods, or the generation, transmission, distribution, supply, wholesale trade, or cross-border exchange of electricity.

PISCES is a new trading platform designed to facilitate secondary sales of private company shares over intermittent trading windows. It will offer a “quasi-public” window for liquidity and price discovery and give companies access to a wider pool of investors before reverting to their “private” status.

PISCES will help private companies scale up and have access to sufficient liquidity as an intermediate step to a potential IPO on the UK's capital markets.

PISCES operates using a financial markets infrastructure (FMI) sandbox, an arrangement which enables market operators to trial new FMI technology or practices in connection with which the Government temporarily modifies or disapplies certain legislation.

The FCA opened the sandbox in June 2025, and it will remain open until June 2030. During this period, the FCA and the Treasury will monitor outcomes and decide whether to transfer PISCES into permanent legislation or take other measures.

As of May 2026, there are four approved PISCES operators, including Vestd, which will operate a non-intermediated model (i.e. without the involvement of broker dealers).

Early trading events on PISCES have illustrated how the framework may function in practice. Qplay Limited, a digital board-game maker, held a five-day private market auction in March 2026 on a platform operated by JP Jenkins, one of the approved PISCES operators. Separately, Tradeable Private Equity used the London Stock Exchange's Private Security Market to hold a trading event for shares in Oxford Science Enterprises, held through a tradeable private equity investment company.

These early events are significant because they demonstrate that private companies can successfully facilitate secondary liquidity through the PISCES framework, providing proof of concept for regulated private market trading outside of public markets.

HMRC has published a technical note that addresses several key areas concerning the tax implications for companies and employees trading their shares on PISCES. This includes guidance concerning how the readily convertible asset (RCA) rules will apply in relation to employee share transactions on PISCES. 

The RCA rules are significant as where shares are RCAs, the employer is obliged to operate PAYE in respect of income tax due in relation to employee share transactions and NICs and apprenticeship levy will apply to the taxable amount. 

The guidance on RCAs is helpful as it supports a position that a holding of shares can contain RCA shares and non-RCA shares, if only a portion of shares are sellable on a PISCES event. However, where a PISCES event is planned and employees can exercise and sell into the PISCES event but choose not to sell, the shares would still be treated as RCAs which may influence exercise behaviour.

New legislation has been introduced to permit the amendment of existing CSOP options and EMI options to insert new exercise rights in relation to PISCES trading events without jeopardising any employee tax reliefs. Existing options must be varied in accordance with the statutory conditions before 6 April 2028. Please let us know if you would like to discuss making an amendment to your plan rules.

PISCES is not just a technical market innovation, but a potential game-changer for the UK’s growth company ecosystem.

The platform should make it easier to provide earlier liquidity to employees in scale-up companies improving the effectiveness of employee share schemes as a tool to retain, incentivise, and reward employees. This is important given that private companies are staying private for longer than the traditional 10-year path to primary exit at acquisition or IPO. It will be important to plan exercises carefully through PISCES to ensure that shares are issued at the correct time where exercises are conditional on sales taking places and conditions are attached to those sales.

The Supreme Court found there was sufficient mutuality of obligation (better described as a “wage-work bargain” under which the employer offers work for pay and the employee agrees to do the work) for the purposes of the first stage of the RMC employment status test. This stage sets out a precondition without which a contract cannot be a contract of employment. It requires the contract to give rise to the irreducible minimum of mutuality of obligation necessary for it to be a contract of employment.

They also held that each separate engagement of a referee to officiate at a match met the condition of mutuality. The overarching contract governing the referee's relationship with PGMOL throughout the football season was not a contract of employment as the condition of mutuality was not met between matches. 

However, moving on to the third stage of the RMC test (the “multi-factorial” approach to all the facts relevant to employment status), the Supreme Court held that it is the nature and extent of the mutual obligations which are relevant to determining whether there is a contract of employment.  If the mutual obligations are strong and enduring, this will likely point towards employment. Conversely, if the mutual obligations are weak and intermittent (as is the case of many casual workers), that will likely point away from employment. In support of this, the Supreme Court noted that where the mutual obligations only just reach the irreducible minimum, that may indicate factors such as independence or lack of subordination which may be incompatible with employment.

The tribunal considered this and then distinguished the character of the mutuality of obligations relating to individual match contracts from contracts of employment on the basis that there was no “ongoing relationship of mutual commitment” or any “expectation of continued performance”. Referees could decline or withdraw from contracts at will before contracts commenced and PGMOL could cancel or reassign matches, all without sanctions, and therefore contracts were characterised as discrete, voluntary obligations which pointed away from employment.

The findings on control are noteworthy and of wider application to other regulated sectors. The tribunal differentiated between managerial and supervisory control characteristic of an employment relationship which they found lacking in PGMOL and the referee’s relationship, and regulatory control which PGMOL administered and enforced but which derived from the Football Association (FA) regulatory framework, the English Football League and the Laws of the Game. It was also important that PGMOL had no control over the core function of match-officiating which was entirely within the control of the referee and that sanctions for misapplication lay with the FA and not PGMOL.

The tribunal noted that integration went beyond operational involvement within or benefiting from an engager's systems. The individual should be part of the “engager's organisational structure rather than an independent participant within a wider framework”. In this latter respect, integration was weak as referees derived their status and authority within the organisational structure from the FA as regulator rather than PGMOL. Their integration was into the regulatory framework of the FA rather than into PGMOL’s undertaking.

The tribunal found there were economic factors in the relationship which pointed towards employment. These included that referees were not exposed to financial risk and were not able to negotiate their rates or the terms of their contracts. However, the economic reality of the relationship was that referees pursued refereeing as a “serious hobby” as they could not make a living from it. It was not undertaken with a profit motive but rather in the pursuit of professional excellence, which pointed away from employment.

Other subsidiary factors were taken into account, including substitution which HMRC’s status tool places considerable weight upon. The tribunal did not place much weight on the absence of substitution provisions recognising that the requirement for personal service reflected a referee’s professional status rather than a hallmark of employment.

When standing back and assessing the cumulative picture, the tribunal found the conclusion to be clear-cut. 

The match day contracts were contracts for services performed within the regulatory framework of football refereeing which requires adherence to standards of conduct and integrity, FA rules, and the Laws of the Game.

It remains to be seen whether HMRC will appeal the tribunal’s decision.

The decision is a reminder of the potential complexity of employment status cases in the absence of a bright-line test. Even where there is sufficient mutuality of obligation to satisfy the first stage of the RMC test, mimimal (albeit sufficient) mutuality of obligation at the third stage “multi-factorial” test may point away from a finding of employment status. The shift in focus to the multi-factorial approach at stage 3 increases uncertainty for taxpayers as HMRC may arrive at a different outcome to the taxpayer which may lead to historic employment income tax exposures as well as interest, and possibly penalties. 

The High Court held in its recent decision Dixon v Globaldata plc [2025] EWHC 2156 (Ch) that Mr Dixon, an employee holding options under Globaldata’s employee share option plan was entitled to a remedy in the equitable doctrine of proprietary estoppel because Globaldata had assured him that options which normally lapsed on cessation of employment under the plan rules would continue to be exercisable following cessation.

The assurance was given by the CEO of Globaldata in a letter to Mr Dixon and in addition Mr Dixon’s settlement agreement with his employer Canadean (a subsidiary of Globaldata) provided that he would be entitled to retain his options.

Mr Dixon relied on this assurance to his detriment because he extended the date up to which he would work and by agreeing to restrictive covenants post-cessation.

Globaldata later failed to allow him to exercise his options because the Remuneration Committee of their Board did not approve the retention of the options by Mr Dixon. Therefore, the options were treated as lapsed on cessation of employment.

Globaldata unsuccessfully sought to rely on a standard exclusion clause in the plan rules which prevented an employee whose employment had terminated from seeking any remedy in respect of any loss of right or prospective right or benefit under the plan. The High Court found that this clause did not protect Globaldata from a claim based on an assurance that rights would continue or that rights had been acquired through estoppel.

The High Court found that it was unconscionable for Globaldata to seek to repudiate from its assurance. All the criteria for a remedy in proprietary estoppel were therefore met.

It is worth noting that the claim in proprietary estoppel was a fallback claim. Mr Dixon’s primary claim was that the CEO had exercised discretion under the plan to allow him to retain the options following cessation of employment. Mr Dixon wanted to rely on ostensible authority which is the authority of outsiders to assume that the CEO has actual authority to do all the things that fall within the usual scope of that office. The High Court found that the CEO could not have had ostensible authority as ostensible authority would only arise if the power in the plan rules was exercised. The CEO did not in fact exercise the power of the Remuneration Committee as this would have required a conscious decision on his part and an awareness that he was doing so.

In a separate hearing on remedy, the High Court considered what compensation Mr Dixon was entitled to in relation to the two tranches of options which he purported to exercise.

The starting point for the determination of a remedy in proprietary estoppel is to hold the promisor to their promise, subject to the limitation that the remedy cannot be out of all proportion to the detriment which had been suffered by Mr Dixon. The Court held that Mr Dixon should be treated in the same way as all other participants in the plan who exercised their options at the time and received value by reference to a bulk sale sales price. The Court rejected an argument that the remedy should be calculated based upon a higher market value at the precise date when the promise was repudiated.

This case illustrates the importance of consulting the plan rules in relation to determinations regarding leaver treatment and effectively recording Board/Remuneration Committee decisions in relation to the treatment of options following cessation of employment.

It also demonstrates the risks that can arise where informal assurances are given to employees regarding the retention of awards without the required authorisations being given under the plan documents. This may give rise to claims in proprietary estoppel that are not excluded by a standard share plan exclusion clause. This also underlines the importance of effectively communicating decisions regarding the treatment of options post-cessation to former employees.