Share schemes for key people
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You cannot pay a brilliant employee what a larger competitor can. You can give them something the competitor cannot: a share in what they are building.
An EMI scheme (Enterprise Management Incentives) is the most tax-efficient way to do that in the UK. Your key people get options over shares, they pay no income tax when the options are granted, and when they eventually sell they usually pay Capital Gains Tax rather than income tax.
And from 6 April 2026, far more companies qualify than before.
The change most companies have missed
EMI used to be squarely aimed at small companies. If you had grown past a certain point, you were shut out and had to use clumsier, more expensive alternatives.
From 6 April 2026, the limits were widened considerably:
| Before April 2026 | From April 2026 | |
|---|---|---|
| Maximum employees | 250 | 500 |
| Gross assets | £30m | £120m |
| Total unexercised options | £3m | £6m |
| Maximum exercise period | 10 years | 15 years |
The individual limit stays at £250,000 of shares per employee.
The practical effect: a large tier of established, profitable British companies that could not use EMI a year ago can use it now. The wider limits also apply to existing options that have not yet expired or been exercised.
If you were told years ago that you were too big for EMI, that advice may simply no longer be true.
Why EMI, rather than just giving them shares
Handing an employee shares outright feels generous. It is usually a mistake.
Give someone £40,000 of shares and HMRC treats it as employment income. They owe income tax and National Insurance on the value, immediately, in cash they do not have. You have given them a tax bill and called it a bonus.
Options solve this. The employee gets the right to buy shares later, at a price set today. Nothing is taxed at grant. If the business grows, they buy at the old price and sell at the new one, and the gain is normally taxed as a capital gain rather than income. If the business does not grow, they simply do not exercise, and nobody is out of pocket.
You also keep control. Options can be written to vest over time, and to lapse if someone leaves. Shares given away outright do not come back.
Growth shares, when EMI does not fit
Not everyone qualifies. Some trades are excluded, some companies exceed even the new limits, and sometimes you want to give equity to someone who is not an employee at all, a consultant or a non-executive.
Growth shares are the usual answer. They are a separate class of share that only has value above a "hurdle" set at today's valuation. The holder participates in future growth but not in the value already built.
They are more flexible than EMI, and less tax-efficient. They need careful drafting and a defensible valuation. But for the right situation they work well.
Where these schemes go wrong
The valuation. EMI options must be granted at a properly determined market value, and HMRC has a specific team that scrutinises them. Get it wrong and the tax advantages can be lost entirely. This is the single most common failure, and it is entirely avoidable.
Missing the notification. EMI grants must be notified to HMRC within the required window. Miss it and the options may not qualify. It is an administrative step, and it has destroyed real schemes.
The handshake. Promising equity verbally, then documenting it years later at a much higher valuation, creates a tax problem for the employee and an argument for you. If you have already made such a promise, tell us. It is usually fixable, and it gets harder the longer it sits.
No thought about leavers. What happens to the options when someone resigns, is dismissed, or falls out with you? If the answer is not written down before you grant them, it will be decided by argument later.
How we help
We check whether you qualify, against the new limits rather than the old ones.
We prepare the valuation and, where appropriate, agree it with HMRC before the options are granted, so it cannot be challenged afterwards.
We design the scheme around what you actually want: who gets what, when it vests, what happens if they leave, and how much of the company you are genuinely willing to part with.
We handle the HMRC notification and the ongoing reporting, so nothing lapses through an administrative oversight.
And we work with your solicitor on the documents rather than pretending to be one.
What it costs
Priced individually. An EMI scheme for a handful of employees in a straightforward company is a defined piece of work, and we will quote it as one. A scheme with multiple classes, existing shareholders and a contested valuation is not.
We will tell you the fee before we start, and we will tell you honestly if we think a scheme is not worth the cost for the number of people involved.
Share schemes: frequently asked questions
Does my company qualify for EMI?+
From April 2026, you need fewer than 500 full-time equivalent employees and gross assets of no more than £120 million, and you must carry on a qualifying trade. Some trades are excluded, including banking, property development and legal services. The limits are far wider than they were, so it is worth rechecking even if you were told no in the past.
How much can I give an employee?+
Up to £250,000 of shares per individual, measured at market value when the options are granted. Across the whole company, the total value of unexercised options is capped at £6 million from April 2026.
Will my employee pay tax?+
Normally no income tax when the options are granted, and no income tax when they are exercised, provided the options were granted at market value. When they sell the shares, the gain is usually taxed as a capital gain, which is typically a much lower rate than income tax.
Do I have to give away control?+
No. Options can be a small minority stake, they can vest over several years, and they can lapse if the person leaves. You decide how much, to whom, and on what conditions.
What if I have already promised someone shares?+
Tell us now rather than later. A verbal promise made when the company was worth less, then documented at today’s higher value, creates a tax charge for the employee. It can usually be dealt with, but it gets more expensive the longer it is left.
Can I include a consultant or non-executive?+
Not in an EMI scheme, which requires them to be an employee working the required hours. Growth shares or unapproved options are the usual route for people outside the payroll.
Want to give your best people a real stake?
Find out whether EMI now fits your company, especially if you were told years ago that it did not.