Share Options: Reward Your Team Without Burning Cash

UK startups compete for talent with better-funded rivals every day. The answer is not to match cash salaries. It is to offer meaningful ownership through a well-designed employee share options scheme.

This free live webinar with Michael Buckworth walks UK founders through everything they need to know to set up, run and manage share options: EMI schemes, vesting structures, equity benchmarks, tax implications, and what happens to options when the business raises or exits.

Why UK startups use share option schemes

A share options scheme gives employees the right to buy shares in the company at a fixed price at a future date, subject to vesting conditions. If the company grows, the employee benefits from the appreciation.

UK startups use share option schemes because they solve three problems at once. They let founders offer meaningful upside without paying cash they do not have. They align employees with the long-term value of the business. And they give employees skin in the game, which improves retention and performance.

EMI vs CSOP vs unapproved options

EMI (Enterprise Management Incentives) is the default choice for eligible UK startups. It provides the strongest tax benefits, is well understood by employees and investors, and has flexible terms. CSOP is a tax-advantaged alternative for larger businesses that do not qualify for EMI. Unapproved options are the fallback for non-employee advisors, non-UK residents or grants exceeding EMI limits.

Growth shares are a different mechanism: rather than an option to buy shares, employees receive actual shares with a value that starts at zero and grows with the company. Growth shares work well for senior hires and can be tax efficient when structured carefully.

About the speaker

Michael Buckworth is a solicitor of the Supreme Court of England and Wales and one of the UK’s most experienced lawyers working with founders. Over 20+ years he has advised hundreds of UK start-ups and scale-ups on the legal decisions that shape their growth, from first incorporation through to exit.

He is the author of Built on Rock: The busy entrepreneur’s legal guide to start-up success, an Amazon Best Seller written for UK founders. Michael has served as “entrepreneur in residence” at London South Bank University and University College London, is a regular speaker at UK start-up and scale-up events, and has been quoted on start-up law in The Telegraph, The Daily Mail, The Independent and City AM.

About the host

Buckworths is the UK’s only law firm working exclusively with start-ups and scale-ups. From incorporation and SEIS/EIS advance assurance to seed and Series A rounds, EMI share option schemes, commercial contracts, employment law and successful exits, we support UK founders at every stage of the start-up and scale-up journey.

In the heart of London’s tech quarter, we work with UK founders across every sector, from AI and deep-tech to SaaS, consumer, healthtech and fintech. Book a free consultation with our start-up lawyers at buckworths.com.

Frequently Asked Questions

What are the eligibility criteria for EMI in the UK?

The company must have gross assets of less than £30 million, fewer than 250 full-time equivalent employees, and be carrying on a qualifying trade. The employee must work at least 25 hours a week or 75% of their working time for the company.

How much equity should I give my first employee?

First engineering hires at UK seed-stage typically receive 0.5% to 2% depending on seniority, cash compensation and stage. Senior operators and executives can receive more.

What is a vesting cliff?

A vesting cliff is a period at the start of employment during which no options vest. The standard is a 1-year cliff. After the cliff, options typically vest monthly over the remaining 3 years.

What is an HMRC valuation and do I need one?

An HMRC valuation determines the market value of company shares for EMI purposes. Agreeing a valuation with HMRC before granting EMI options gives certainty on the tax treatment.

What happens to employee share options in a funding round?

Existing options continue on the same terms and dilute proportionally. The company usually increases the option pool as part of the round.

What happens to options when an employee leaves?

Vested options can typically be exercised within a short window after leaving (often 90 days). Unvested options usually lapse. Some UK startups extend the exercise window for early employees.

Can non-employees receive EMI options?

No. EMI is only available to employees. Advisors and consultants must receive unapproved options or advisor shares.

For help setting up your share option scheme, get in touch with the Buckworths team.