EMI share options are the most tax-efficient way to give your employees equity in a UK startup. No income tax or National Insurance on grant or exercise, capital gains tax at 18% instead of up to 45% income tax, and a Corporation Tax deduction for the company. The April 2026 rule changes mean more businesses qualify than ever before.

I didn't set up an EMI scheme until our third hire. That was a mistake. Our first two employees negotiated equity informally, on napkin-level terms, with no scheme, no HMRC valuation, no vesting schedule, and no documentation beyond an email saying "we'll sort you out 2% each." When I eventually spoke to a lawyer about formalising it, the cost of unpicking what we'd done was more than setting it up properly would have been in the first place.

If you're about to hire someone and you're thinking about offering equity, read this before you promise anything. The difference between a properly structured EMI scheme and an informal equity promise is the difference between a tax-efficient retention tool and a legal mess that costs you money, relationships, and potentially your company. We've written about the equity vs salary trade-off separately, but this guide is specifically about how to do the equity part right.

What is an EMI Scheme?

EMI stands for Enterprise Management Incentives. In plain English, it's a government-approved way to give your employees share options that come with massive tax breaks for both them and you.

Here's how it works. You grant an employee the option to buy shares in your company at a fixed price (the exercise price). That price is agreed with HMRC upfront based on a valuation of your company at the time of the grant. The employee doesn't buy the shares immediately. Instead, the options vest over time, typically three or four years, and the employee only buys (exercises) them later, usually when the company is sold, goes public, or hits a specific milestone.

The magic is in the tax treatment. If you set it up correctly, your employee pays zero income tax and zero National Insurance when they receive the options AND when they exercise them. When they eventually sell the shares, they pay Capital Gains Tax instead of income tax. And because of Business Asset Disposal Relief (BADR), the CGT rate on the first £1 million of gains is just 18% from April 2026. Compare that to income tax at up to 45% plus National Insurance. The savings are enormous.

A quick example. You grant an employee options over shares worth £50,000. Without an EMI scheme, that equity would be taxed as income when they receive it. At 45% plus NI, they'd lose over £25,000 in tax. With EMI, they pay nothing upfront and 18% CGT when they sell. On the same £50,000 gain, that's £9,000 in tax instead of £25,000+. Your employee keeps an extra £16,000. For doing absolutely nothing differently except having the right scheme in place.

That's why every startup lawyer, accountant, and investor will tell you to set up an EMI scheme before you start handing out equity. Not after. Before.

Who Qualifies for EMI? (The 2026 Rules Changed Everything)

The April 2026 Budget brought the biggest expansion of EMI eligibility since the scheme began. If you checked whether you qualified before 2026 and the answer was no, check again. The goalposts moved significantly. GOV.UK has the official guidance but I'll give you the version that doesn't require a law degree. Grant Thornton and Saffery both published solid breakdowns of the changes if you want the professional commentary.

Your company must meet ALL of these:

Fewer than 500 full-time equivalent employees (was 250 before April 2026). Gross assets under £120 million (was £30 million). Be an independent company, not a 51%+ owned subsidiary. Be a qualifying trading company, not purely an investment company. If you're not sure whether your company structure is right for EMI, sort that first. Have no more than £6 million worth of shares under unexercised EMI options (was £3 million).

The employee headcount doubling from 250 to 500 and the gross assets limit quadrupling from £30 million to £120 million means Series B and even Series C companies can now access EMI. If you're in a capital-intensive sector like biotech, cleantech, or advanced manufacturing where your assets are high relative to your revenue, the old £30 million limit might have excluded you. The new £120 million limit probably doesn't.

Some sectors are excluded. Banking, farming, property development, hotels and nursing homes, shipbuilding, coal and steel production. If you're in one of these, EMI isn't available to you regardless of company size. CSOP (Company Share Option Plan) might be your next best option.

Your employees must meet these:

Work at least 25 hours per week for your company, OR spend at least 75% of their working time on your company. Not own more than 30% of your company's share capital. Be an employee, not a contractor or consultant (this catches people out constantly).

What each employee can receive:

Up to £250,000 worth of shares under EMI options, valued at the date of grant. This limit hasn't changed and applies per employee across all EMI options they hold in your company.

The exercise window got longer too. EMI options must now be exercisable within 15 years of grant (was 10 years). This can be applied retrospectively to existing unexercised options. If you granted options five years ago with a 10-year window, you can extend them to 15 years without losing the tax advantages.

And from April 2027, HMRC is removing the requirement to notify individual EMI grants separately. You'll still file annual Employment Related Securities (ERS) returns, but the per-grant notification step goes away. Less admin. About time.

The Tax Advantages (This is Where It Gets Good)

I'm going to lay this out for both sides because the benefits work for the employee AND the company. That's rare in tax.

For the employee:

No income tax or National Insurance when options are granted. None. Zero. I still find this slightly mental given how aggressive HMRC is about taxing everything else.

No income tax or National Insurance when options are exercised, provided the exercise price was set at or above market value at the time of grant. This is why the HMRC valuation matters so much.

When shares are eventually sold, the gain is taxed as Capital Gains Tax, not income tax. CGT rates for 2026/27 are 18% for basic rate taxpayers and 24% for higher/additional rate taxpayers.

If the employee held the options for at least two years, they can claim Business Asset Disposal Relief (BADR), reducing the CGT rate to 18% on the first £1 million of lifetime gains. Unlike normal BADR, EMI doesn't require the employee to own 5% of the company. Even a tiny EMI holding qualifies. That's a huge deal and most founders don't realise it.

I sat down once and worked out the actual difference on a napkin at one of our events because a founder didn't believe me when I told her the numbers. Employee gets a £200,000 gain on exit. Without EMI: income tax at 45% plus NI, she's handing over roughly £100,000+. With EMI and BADR: 18% CGT, she pays £36,000. Same gain. Same employee. Same company. £64,000 difference based purely on whether the founder bothered to set up a scheme. That napkin got photographed and shared around the table. Three founders at that event set up EMI schemes within a month.

For the company:

No employer National Insurance on the options. Compare that to a salary increase where you'd pay 15% employer NI above the £5,000 threshold.

When employees exercise their options, the company can claim a Corporation Tax deduction equal to the difference between the market value at exercise and the exercise price. If your employee exercises options over shares now worth £100,000 that they paid £5,000 for, your company claims a £95,000 CT deduction. At 25% Corporation Tax, that's a £23,750 tax saving.

So the employee gets tax-efficient equity. The company gets a CT deduction. The government gives up some tax revenue. Everyone wins except HMRC, and they designed the scheme, so presumably they're fine with it. If you want to stack even more tax advantages on top, SEIS and EIS do the same thing for your investors.

How to Set Up an EMI Scheme Step by Step

This is where most founders get overwhelmed. It sounds complex. It's actually a sequence of fairly straightforward steps. Here's the process:

Step 1: Check eligibility. Make sure your company and your intended recipients qualify under the rules above. You need to be a registered limited company for EMI - sole traders can't use it. If you're not sure whether you qualify, your accountant or a platform like SeedLegals or Vestd can confirm within a day.

Step 2: Get an HMRC valuation. This is non-negotiable and it's the most important step. You need HMRC to agree the market value of your shares at the time you grant the options. This is called the Actual Market Value (AMV). You submit a valuation to HMRC using form VAL231. They review it and either agree or come back with questions. The valuation is valid for 90 days once agreed, so time your grants accordingly.

Why does this matter? Because the exercise price needs to be at or above this agreed market value to avoid income tax on exercise. If you set the exercise price below AMV, the difference gets taxed as income when the employee exercises. That defeats the whole purpose of EMI.

A founder at one of our Startup Networks events told me she'd granted EMI options without getting the HMRC valuation first. Set the exercise price based on her own estimate. HMRC disagreed with her valuation when she eventually submitted it. The exercise price was below AMV. Her employees now faced an income tax bill on exercise that they weren't expecting and she hadn't warned them about. Awkward conversations all round.

Get the valuation first. Always.

Step 3: Draft the scheme rules and option agreements. The scheme rules govern how the EMI scheme works overall. The option agreements are individual documents for each employee. These need to cover the exercise price, the vesting schedule, good leaver/bad leaver provisions, what happens on exit, and the circumstances under which options can be exercised.

Step 4: Get board approval. Your board needs to formally approve the creation of the scheme and the grant of options to specific employees. This requires a board resolution. If you haven't sorted your basic business admin yet - business bank account, company registration, articles of association - do that before you start on EMI.

Step 5: Grant the options and sign agreements. Each employee signs their option agreement. The grant date is when the clock starts on the two-year BADR qualifying period and the vesting schedule.

Step 6: Notify HMRC. For options granted in the 2025/26 and 2026/27 tax years, you must notify HMRC by 6 July following the end of the tax year. For options granted from April 2027 onwards, this separate notification step is being removed. You'll just include the grants in your annual ERS return.

Step 7: File your annual ERS return. Every year, by 6 July, you file an Employment Related Securities return with HMRC detailing all option grants, exercises, and other share-related events during the previous tax year. Miss this deadline and your options lose their qualifying EMI status. I cannot stress this enough. Miss the deadline and the tax advantages disappear. We nearly missed it our first year because nobody had put it in the calendar. Found out about it on 4 July. Two days to spare. My heart rate still goes up thinking about it.

The 90-Day Valuation Trap Nobody Warns You About

Here's something I learned the hard way that I've never seen in any other EMI guide.

Your HMRC valuation is valid for 90 days. That sounds like plenty of time. It's not. Not if you're growing fast.

Say you get your valuation agreed in January. Your shares are valued at £1 per share. You grant options to two employees in February. Brilliant. Then March comes and you close a funding round that values your company at 3x what the HMRC valuation said. You want to hire someone in April. But your valuation has expired. You need a new one. And the new valuation is going to reflect the funding round, meaning the exercise price for your April hire is three times higher than what your February hires got.

Same company. Same stage. Two months apart. Completely different deal for the employee. The February hires got options at £1. The April hire gets options at £3. Try explaining that in a team meeting without causing resentment.

The workaround is timing. If you know a funding round is coming, get your HMRC valuation done and grant all your planned options BEFORE the round closes. The lower pre-round valuation means a lower exercise price for your employees, which means more upside for them on exit. That's not gaming the system. That's planning properly. SeedLegals includes unlimited valuations in their annual fee specifically because fast-growing startups need to do this multiple times a year.

If you're on a platform, this is managed for you. If you're using a solicitor, each new valuation is another £500-£1,500 bill. Over a year with three or four hires, the platform pays for itself on valuations alone.

Vesting Schedules Explained

Vesting determines when your employee actually earns their options. They don't get everything on day one. That would be madness. Options vest gradually over time, which keeps the employee incentivised to stay.

The most common vesting schedule in UK startups is four-year vesting with a one-year cliff.

That means: the employee gets nothing for the first twelve months (the cliff). If they leave before their first anniversary, they walk away with zero options. After twelve months, 25% of their options vest immediately. Then the remaining 75% vest monthly or quarterly over the next three years.

Why the cliff? Because I didn't have one for our first two hires and I regretted it immediately. One of them left after four months. Without a cliff, they'd technically earned four months' worth of equity for four months of work that, being brutally honest, didn't move the needle. With a cliff they'd have walked away with nothing and that would have been fair because at four months neither of us really knew if the relationship was working.

The cliff protects you from expensive hiring mistakes. Grant someone 10,000 options without a cliff and they turn out to be wrong for the role after three months? They walk away with 2,500 vested options. With a cliff, they walk away with nothing. Sounds harsh. It's not. It's the whole point. You need twelve months to assess whether someone is actually going to contribute to the thing they're being given ownership of.

Some startups use three-year vesting. Some use milestone-based vesting instead of time-based (options vest when the company hits specific targets rather than after a set period). Some use a combination. EMI is flexible enough to accommodate whatever structure makes sense for your business. Just make sure it's documented clearly in the option agreement because ambiguity in vesting terms is one of the most common sources of disputes.

Good Leavers, Bad Leavers, and What Happens When Someone Leaves

This is the section I wish every founder would read before they set up their scheme. Because what happens when someone leaves is where EMI schemes either work beautifully or explode in everyone's face.

Good leaver: Typically defined as someone who leaves due to redundancy, retirement, death, disability, or circumstances the board considers to be "good leaving." A good leaver usually keeps their vested options and has a window (often 90 days, sometimes longer) to exercise them.

Bad leaver: Someone who's fired for cause, resigns voluntarily (depending on your scheme rules), or breaches their employment contract. A bad leaver typically forfeits all their options, both vested and unvested.

The grey area kills you. What about someone who leaves amicably after two years to take another job? Are they a good leaver or a bad leaver? What about someone who's made redundant after eighteen months? What about a founder-employee who steps back to part-time?

I've watched these conversations tear small teams apart. The employee thinks they're a good leaver. The company thinks they're a bad leaver. The option agreement is vague. Nobody wants to hire a lawyer. Everyone's angry.

Define it clearly upfront. Write specific scenarios into your option agreement. Make sure every employee understands, at the point of signing, exactly what happens to their options under every conceivable leaving scenario. This conversation is slightly uncomfortable when someone joins. It's devastating when they leave and the terms are unclear.

One more thing. If an employee leaves and has exercised their options (meaning they own actual shares, not just options), those shares don't disappear. They're a shareholder. They have rights. You can include drag-along provisions and compulsory transfer clauses in your articles of association to manage this, but you need to set those up before you grant any options. Your lawyer will handle this but only if you tell them to.

EMI vs CSOP vs Unapproved Options

Three types of share options. Different rules, different tax treatment, different use cases.

	EMI	CSOP	Unapproved
Max per employee	£250,000	£60,000	No limit
Company size limit	500 employees / £120M assets	None	None
Income tax on exercise	None (if exercise price >= AMV)	None (if held 3+ years)	Yes, full rate
NI on exercise	None	None	Yes
CGT rate (with BADR)	18% on first £1M	18-24% (BADR harder to access)	18-24%
Employer NI	None	None	15%
CT deduction for company	Yes	Yes	Yes
HMRC valuation required	Yes	No (but recommended)	No
Excluded sectors	Yes (banking, farming etc)	No	No

When to use EMI: Your company qualifies and the employee qualifies. Always use EMI when you can. The tax advantages are dramatically better than everything else.

When to use CSOP: Your company doesn't qualify for EMI (excluded sector, too large before 2026 changes) or the employee doesn't qualify (works less than 25 hours, owns more than 30%). CSOP has a £60,000 per employee limit which is restrictive but the tax treatment is still better than unapproved.

When to use unapproved: The employee doesn't qualify for either EMI or CSOP. Consultants, advisors, non-executive directors, part-time team members. The tax treatment is brutal, full income tax and NI on exercise, but sometimes unapproved options are the only option. You can't convert existing unapproved options into EMI retrospectively, but you can grant new EMI options alongside existing unapproved ones if the employee now qualifies.

How Much Does an EMI Scheme Cost to Set Up?

The range is wide and most founders are surprised in both directions. Surprised that DIY is possible and surprised that solicitors charge as much as they do.

Platform route (SeedLegals, Vestd):

SeedLegals charges £2,699/year for their Options subscription. Unlimited EMI schemes, unlimited valuations, unlimited support. Everything included.

Vestd starts at £25/month on their lower tiers but the full EMI service with unlimited holders is £4,200/year (or £5,040 paid monthly).

Both platforms handle the HMRC valuation, generate the legal documents, manage the cap table, and walk you through the process. If you're a startup doing this for the first time, a platform is almost certainly the right choice. You'll make fewer mistakes, the documentation is standardised, and the cost is predictable.

Solicitor route:

£4,000-£10,000+ for initial setup depending on the firm and complexity. Some boutique firms like The Mill Consultancy offer fixed-fee packages from around £3,000-£5,000. City law firms charge more. A lot more.

The solicitor route makes sense if your situation is complex, you have unusual share structures, you need bespoke vesting conditions, or you're raising a round simultaneously and want everything coordinated. For a standard EMI scheme with straightforward terms, a platform is usually sufficient and significantly cheaper.

DIY route:

Technically possible. HMRC provides the forms. You can draft your own scheme rules. You can submit your own valuation. I would strongly advise against this unless you or someone on your team has done it before. The consequences of getting it wrong, options losing their qualifying status, unexpected tax bills for employees, invalid documentation, are far more expensive than paying a platform £2,699 to do it properly. Add this to your startup costs budget and move on.

Ongoing costs:

The HMRC valuation is valid for 90 days. If you're hiring regularly, you'll need multiple valuations per year. On a platform, this is included. With a solicitor, each valuation costs £500-£1,500+. Annual ERS filing needs to happen every year by 6 July. Platforms automate this. Solicitors charge for it.

Common Mistakes Founders Make With EMI

Promising equity before setting up the scheme. "We'll sort you out with 2% once we get the paperwork done." Famous last words. I said them myself. The problem is that an informal promise creates expectations without legal structure. When you eventually formalise, the valuation might be different, the percentage might not work with your cap table, and the employee is disappointed. Set up the scheme first. Then make promises.

Missing the HMRC notification deadline. Notify HMRC by 6 July after the tax year in which you granted options. Miss this and your options lose their qualifying EMI status. They become unapproved options. Your employees now face income tax and NI on exercise instead of CGT. You've just accidentally made their equity worth 30-40% less. Set a calendar reminder. Better yet, use a platform that does it automatically.

Setting the exercise price too low. The exercise price must be at or above the Actual Market Value agreed with HMRC. If it's lower, the difference is taxed as income on exercise. Some founders try to set a low exercise price thinking it benefits the employee. It does the opposite. Get the HMRC valuation, set the price at AMV, and let the future growth be the employee's reward.

Not explaining the scheme to employees. I've met employees who received EMI options and had no idea what they were worth, how they worked, or what "vesting" meant. They just signed the paperwork because their boss told them to. That's a wasted retention tool. If your employee doesn't understand their equity, they can't be motivated by it. Sit down with every option holder and explain it properly. What the options are worth today. What they could be worth at exit. What happens if they leave. How the tax works.

Ignoring the annual ERS return. Even if nothing has changed, even if no options were granted or exercised during the year, you still need to file a nil return by 6 July. Failing to file can result in penalties and, in the worst case, your scheme losing its qualifying status. It takes five minutes. Just do it.

Not including drag-along and compulsory transfer provisions. If an employee exercises their options and then leaves, they own shares. Without proper provisions in your articles of association, you could end up with a disgruntled ex-employee as a minority shareholder with rights you didn't anticipate. Sort this before you grant any options.

The Conversation Nobody Wants to Have

I'm going to say something that might be controversial in a guide about EMI schemes: most employees don't understand their options and most founders don't explain them properly. Both sides are failing.

I've sat in on conversations at our events where a founder proudly says "yeah, we gave her 1% of the company" and the employee in question has no idea what 1% means in actual money. Is it £1,000? £100,000? £1,000,000? Depends entirely on the valuation at exit, which depends on about fifty things nobody can predict. But the employee heard "1%" and mentally calculated it against a number they made up in their head. Usually that number is too high.

Here's what you should tell every employee when you grant them EMI options:

"These options give you the right to buy X shares at Y pence each. Right now those shares are worth Z pence each, so the options are essentially worth nothing on day one. If the company is sold for £A million, your shares would be worth roughly £B before tax. You'd pay 18% CGT if you've held them for two years, so you'd take home approximately £C. If the company fails, your options are worth nothing. Most startups fail. These options are a bet on the company succeeding, not a guarantee of anything."

That conversation takes five minutes. It sets expectations correctly. It prevents the "but I thought my equity was worth..." conversation that happens at exit when the maths doesn't match what the employee imagined. And it demonstrates respect for your employee's intelligence rather than hiding behind jargon and hoping they don't ask questions.

I've watched founders avoid this conversation because they're worried it'll put the employee off. It won't. What puts employees off is finding out three years later that their "1% of the company" is worth less than they assumed because they didn't understand dilution, liquidation preferences, or what "fully diluted" means. Honesty upfront is always cheaper than disappointment later.

If you want your EMI scheme to actually retain people, they need to understand it. That's on you as the founder, not on them as the employee.

What Happens at Exit

This is what everyone's actually waiting for. What happens when the company gets acquired, goes public, or has a secondary sale?

Acquisition: The most common exit for UK startups. The acquirer buys all the shares. EMI option holders exercise their options (buy shares at the exercise price) and then immediately sell them to the acquirer. The gain between the exercise price and the sale price is taxed as Capital Gains. With BADR (if held 2+ years), the rate is 18% on the first £1 million. If you're not at exit stage yet and still raising your seed round, EMI options granted now will be worth dramatically more by the time an exit happens.

A founder in our community sold his company last year. His lead developer had been granted EMI options four years earlier at an exercise price of £0.10 per share. The acquisition valued the shares at £4.80 each. She exercised and sold on the same day - paid £2,000 to exercise, received £96,000 from the sale. Her tax bill at 18% BADR was about £17,000. She took home roughly £77,000. Without EMI, that same gain would have been taxed as income - she'd have kept maybe £50,000. Twenty-seven grand difference. She told me afterwards that she'd never fully understood what the options were worth until the cheque landed. "I just signed the paperwork when I joined because James told me to." That sentence haunts me because it means she spent four years not being properly motivated by the thing that was supposed to motivate her.

IPO: Option holders exercise their options and receive shares in the publicly traded company. They can hold or sell. CGT applies when they eventually sell. BADR may apply if the conditions are met at the time of disposal.

Secondary sale: Increasingly common in later-stage startups. Existing shareholders sell some shares to new investors or on platforms like PISCES. From April 2026, EMI and CSOP options can include PISCES as an exercise event. Option holders can exercise and sell without waiting for a full acquisition.

The key thing for founders: make sure your option agreements specify which events trigger exercise. Some schemes only allow exercise on a "sale of the company." Others allow exercise on IPO, secondary sale, or at the board's discretion. The broader the exercise triggers, the more flexibility your option holders have. But broader triggers also mean less control for the board. If you're heading toward a raise and need to understand how EMI affects your startup valuation, that's a separate but related conversation.

FAQs

What is an EMI scheme?

An Enterprise Management Incentives scheme is a tax-advantaged share option plan for UK companies with fewer than 500 employees and under £120 million in gross assets. It lets you give employees options to buy shares at a price agreed with HMRC, with no income tax or NI on grant or exercise.

How much does an EMI scheme cost to set up?

£2,699/year on SeedLegals or £4,200/year on Vestd for the platform route. £3,000-£10,000+ for a solicitor. DIY is technically possible but risky.

What changed about EMI in April 2026?

Employee limit doubled from 250 to 500. Gross assets limit quadrupled from £30 million to £120 million. Company option pool doubled from £3 million to £6 million. Exercise window extended from 10 to 15 years. These are the biggest changes since EMI began.

Do employees pay tax on EMI options?

No income tax or NI on grant or exercise if the exercise price is at or above the HMRC-agreed market value. When shares are sold, gains are taxed as Capital Gains Tax at 18% (with BADR) or 18-24% (without). Compare that to up to 45% income tax plus NI on unapproved options.

What's the difference between EMI and CSOP?

EMI is better. Higher limits (£250,000 vs £60,000), better tax treatment, easier BADR access after 2 years. Use CSOP only if you don't qualify for EMI.

Can consultants or contractors get EMI options?

Na. EMI is for employees only. They must work at least 25 hours per week or spend 75%+ of their working time on your company. Consultants, advisors, and NEDs need unapproved options instead, which have worse tax treatment.

What happens to EMI options if an employee leaves?

Depends on whether they're classified as a good leaver or bad leaver under your scheme rules. Good leavers typically keep vested options and have 90 days to exercise. Bad leavers typically forfeit everything. Define these terms clearly before you grant any options.

How long does an HMRC EMI valuation take?

HMRC aims to respond within 30 working days. In practice it can take longer, especially around tax year end when they're busy. The valuation is valid for 90 days once agreed. Plan your grant timing accordingly.

Can I set up an EMI scheme alongside existing unapproved options?

Yes. You can grant new EMI options to employees who previously received unapproved options. You can't convert existing unapproved options into EMI retrospectively, but you can run both schemes side by side.

Written by @James Beresford-Morgan, co-founder of Startup Networks. I set up our EMI scheme later than I should have and it cost us time, money, and some uncomfortable conversations. If this guide saves you from making the same mistake, it's done its job.

This is part of our equity and compensation series. For SEIS and EIS tax relief on investment, read our SEIS/EIS guide. For raising your first round, see our pre-seed funding guide. Planning your exit? Our exit strategies guide covers what happens when EMI options actually pay out. Need a pitch deck for investors? Check our pitch deck guide. Or discuss EMI setup with other founders in our forum.

Last updated: July 2026. EMI eligibility changes from Finance Act 2026, announced Autumn Budget 2025. Tax rates confirmed for 2026/27 from HMRC. BADR rate of 18% from 6 April 2026. SeedLegals pricing from seedlegals.com (July 2026). Vestd pricing from vestd.com (July 2026). Solicitor cost ranges from AccountingWEB and The Mill Consultancy. Corporation Tax deduction guidance from GoFile and Saffery. Grant notification changes from Practical Law (Thomson Reuters).

8 minutes ago, James said:

EMI share options are the most tax-efficient way to give your employees equity in a UK startup. No income tax or National Insurance on grant or exercise, capital gains tax at 18% instead of up to 45% income tax, and a Corporation Tax deduction for the company. The April 2026 rule changes mean more businesses qualify than ever before.

I didn't set up an EMI scheme until our third hire. That was a mistake. Our first two employees negotiated equity informally, on napkin-level terms, with no scheme, no HMRC valuation, no vesting schedule, and no documentation beyond an email saying "we'll sort you out 2% each." When I eventually spoke to a lawyer about formalising it, the cost of unpicking what we'd done was more than setting it up properly would have been in the first place.

If you're about to hire someone and you're thinking about offering equity, read this before you promise anything. The difference between a properly structured EMI scheme and an informal equity promise is the difference between a tax-efficient retention tool and a legal mess that costs you money, relationships, and potentially your company. We've written about the equity vs salary trade-off separately, but this guide is specifically about how to do the equity part right.

What is an EMI Scheme?

EMI stands for Enterprise Management Incentives. In plain English, it's a government-approved way to give your employees share options that come with massive tax breaks for both them and you.

Here's how it works. You grant an employee the option to buy shares in your company at a fixed price (the exercise price). That price is agreed with HMRC upfront based on a valuation of your company at the time of the grant. The employee doesn't buy the shares immediately. Instead, the options vest over time, typically three or four years, and the employee only buys (exercises) them later, usually when the company is sold, goes public, or hits a specific milestone.

The magic is in the tax treatment. If you set it up correctly, your employee pays zero income tax and zero National Insurance when they receive the options AND when they exercise them. When they eventually sell the shares, they pay Capital Gains Tax instead of income tax. And because of Business Asset Disposal Relief (BADR), the CGT rate on the first £1 million of gains is just 18% from April 2026. Compare that to income tax at up to 45% plus National Insurance. The savings are enormous.

A quick example. You grant an employee options over shares worth £50,000. Without an EMI scheme, that equity would be taxed as income when they receive it. At 45% plus NI, they'd lose over £25,000 in tax. With EMI, they pay nothing upfront and 18% CGT when they sell. On the same £50,000 gain, that's £9,000 in tax instead of £25,000+. Your employee keeps an extra £16,000. For doing absolutely nothing differently except having the right scheme in place.

That's why every startup lawyer, accountant, and investor will tell you to set up an EMI scheme before you start handing out equity. Not after. Before.

Who Qualifies for EMI? (The 2026 Rules Changed Everything)

The April 2026 Budget brought the biggest expansion of EMI eligibility since the scheme began. If you checked whether you qualified before 2026 and the answer was no, check again. The goalposts moved significantly. GOV.UK has the official guidance but I'll give you the version that doesn't require a law degree. Grant Thornton and Saffery both published solid breakdowns of the changes if you want the professional commentary.

Your company must meet ALL of these:

Fewer than 500 full-time equivalent employees (was 250 before April 2026). Gross assets under £120 million (was £30 million). Be an independent company, not a 51%+ owned subsidiary. Be a qualifying trading company, not purely an investment company. If you're not sure whether your company structure is right for EMI, sort that first. Have no more than £6 million worth of shares under unexercised EMI options (was £3 million).

The employee headcount doubling from 250 to 500 and the gross assets limit quadrupling from £30 million to £120 million means Series B and even Series C companies can now access EMI. If you're in a capital-intensive sector like biotech, cleantech, or advanced manufacturing where your assets are high relative to your revenue, the old £30 million limit might have excluded you. The new £120 million limit probably doesn't.

Some sectors are excluded. Banking, farming, property development, hotels and nursing homes, shipbuilding, coal and steel production. If you're in one of these, EMI isn't available to you regardless of company size. CSOP (Company Share Option Plan) might be your next best option.

Your employees must meet these:

Work at least 25 hours per week for your company, OR spend at least 75% of their working time on your company. Not own more than 30% of your company's share capital. Be an employee, not a contractor or consultant (this catches people out constantly).

What each employee can receive:

Up to £250,000 worth of shares under EMI options, valued at the date of grant. This limit hasn't changed and applies per employee across all EMI options they hold in your company.

The exercise window got longer too. EMI options must now be exercisable within 15 years of grant (was 10 years). This can be applied retrospectively to existing unexercised options. If you granted options five years ago with a 10-year window, you can extend them to 15 years without losing the tax advantages.

And from April 2027, HMRC is removing the requirement to notify individual EMI grants separately. You'll still file annual Employment Related Securities (ERS) returns, but the per-grant notification step goes away. Less admin. About time.

The Tax Advantages (This is Where It Gets Good)

I'm going to lay this out for both sides because the benefits work for the employee AND the company. That's rare in tax.

For the employee:

No income tax or National Insurance when options are granted. None. Zero. I still find this slightly mental given how aggressive HMRC is about taxing everything else.

No income tax or National Insurance when options are exercised, provided the exercise price was set at or above market value at the time of grant. This is why the HMRC valuation matters so much.

When shares are eventually sold, the gain is taxed as Capital Gains Tax, not income tax. CGT rates for 2026/27 are 18% for basic rate taxpayers and 24% for higher/additional rate taxpayers.

If the employee held the options for at least two years, they can claim Business Asset Disposal Relief (BADR), reducing the CGT rate to 18% on the first £1 million of lifetime gains. Unlike normal BADR, EMI doesn't require the employee to own 5% of the company. Even a tiny EMI holding qualifies. That's a huge deal and most founders don't realise it.

I sat down once and worked out the actual difference on a napkin at one of our events because a founder didn't believe me when I told her the numbers. Employee gets a £200,000 gain on exit. Without EMI: income tax at 45% plus NI, she's handing over roughly £100,000+. With EMI and BADR: 18% CGT, she pays £36,000. Same gain. Same employee. Same company. £64,000 difference based purely on whether the founder bothered to set up a scheme. That napkin got photographed and shared around the table. Three founders at that event set up EMI schemes within a month.

For the company:

No employer National Insurance on the options. Compare that to a salary increase where you'd pay 15% employer NI above the £5,000 threshold.

When employees exercise their options, the company can claim a Corporation Tax deduction equal to the difference between the market value at exercise and the exercise price. If your employee exercises options over shares now worth £100,000 that they paid £5,000 for, your company claims a £95,000 CT deduction. At 25% Corporation Tax, that's a £23,750 tax saving.

So the employee gets tax-efficient equity. The company gets a CT deduction. The government gives up some tax revenue. Everyone wins except HMRC, and they designed the scheme, so presumably they're fine with it. If you want to stack even more tax advantages on top, SEIS and EIS do the same thing for your investors.

How to Set Up an EMI Scheme Step by Step

This is where most founders get overwhelmed. It sounds complex. It's actually a sequence of fairly straightforward steps. Here's the process:

Step 1: Check eligibility. Make sure your company and your intended recipients qualify under the rules above. You need to be a registered limited company for EMI - sole traders can't use it. If you're not sure whether you qualify, your accountant or a platform like SeedLegals or Vestd can confirm within a day.

Step 2: Get an HMRC valuation. This is non-negotiable and it's the most important step. You need HMRC to agree the market value of your shares at the time you grant the options. This is called the Actual Market Value (AMV). You submit a valuation to HMRC using form VAL231. They review it and either agree or come back with questions. The valuation is valid for 90 days once agreed, so time your grants accordingly.

Why does this matter? Because the exercise price needs to be at or above this agreed market value to avoid income tax on exercise. If you set the exercise price below AMV, the difference gets taxed as income when the employee exercises. That defeats the whole purpose of EMI.

A founder at one of our Startup Networks events told me she'd granted EMI options without getting the HMRC valuation first. Set the exercise price based on her own estimate. HMRC disagreed with her valuation when she eventually submitted it. The exercise price was below AMV. Her employees now faced an income tax bill on exercise that they weren't expecting and she hadn't warned them about. Awkward conversations all round.

Get the valuation first. Always.

Step 3: Draft the scheme rules and option agreements. The scheme rules govern how the EMI scheme works overall. The option agreements are individual documents for each employee. These need to cover the exercise price, the vesting schedule, good leaver/bad leaver provisions, what happens on exit, and the circumstances under which options can be exercised.

Step 4: Get board approval. Your board needs to formally approve the creation of the scheme and the grant of options to specific employees. This requires a board resolution. If you haven't sorted your basic business admin yet - business bank account, company registration, articles of association - do that before you start on EMI.

Step 5: Grant the options and sign agreements. Each employee signs their option agreement. The grant date is when the clock starts on the two-year BADR qualifying period and the vesting schedule.

Step 6: Notify HMRC. For options granted in the 2025/26 and 2026/27 tax years, you must notify HMRC by 6 July following the end of the tax year. For options granted from April 2027 onwards, this separate notification step is being removed. You'll just include the grants in your annual ERS return.

Step 7: File your annual ERS return. Every year, by 6 July, you file an Employment Related Securities return with HMRC detailing all option grants, exercises, and other share-related events during the previous tax year. Miss this deadline and your options lose their qualifying EMI status. I cannot stress this enough. Miss the deadline and the tax advantages disappear. We nearly missed it our first year because nobody had put it in the calendar. Found out about it on 4 July. Two days to spare. My heart rate still goes up thinking about it.

The 90-Day Valuation Trap Nobody Warns You About

Here's something I learned the hard way that I've never seen in any other EMI guide.

Your HMRC valuation is valid for 90 days. That sounds like plenty of time. It's not. Not if you're growing fast.

Say you get your valuation agreed in January. Your shares are valued at £1 per share. You grant options to two employees in February. Brilliant. Then March comes and you close a funding round that values your company at 3x what the HMRC valuation said. You want to hire someone in April. But your valuation has expired. You need a new one. And the new valuation is going to reflect the funding round, meaning the exercise price for your April hire is three times higher than what your February hires got.

Same company. Same stage. Two months apart. Completely different deal for the employee. The February hires got options at £1. The April hire gets options at £3. Try explaining that in a team meeting without causing resentment.

The workaround is timing. If you know a funding round is coming, get your HMRC valuation done and grant all your planned options BEFORE the round closes. The lower pre-round valuation means a lower exercise price for your employees, which means more upside for them on exit. That's not gaming the system. That's planning properly. SeedLegals includes unlimited valuations in their annual fee specifically because fast-growing startups need to do this multiple times a year.

If you're on a platform, this is managed for you. If you're using a solicitor, each new valuation is another £500-£1,500 bill. Over a year with three or four hires, the platform pays for itself on valuations alone.

Vesting Schedules Explained

Vesting determines when your employee actually earns their options. They don't get everything on day one. That would be madness. Options vest gradually over time, which keeps the employee incentivised to stay.

The most common vesting schedule in UK startups is four-year vesting with a one-year cliff.

That means: the employee gets nothing for the first twelve months (the cliff). If they leave before their first anniversary, they walk away with zero options. After twelve months, 25% of their options vest immediately. Then the remaining 75% vest monthly or quarterly over the next three years.

Why the cliff? Because I didn't have one for our first two hires and I regretted it immediately. One of them left after four months. Without a cliff, they'd technically earned four months' worth of equity for four months of work that, being brutally honest, didn't move the needle. With a cliff they'd have walked away with nothing and that would have been fair because at four months neither of us really knew if the relationship was working.

The cliff protects you from expensive hiring mistakes. Grant someone 10,000 options without a cliff and they turn out to be wrong for the role after three months? They walk away with 2,500 vested options. With a cliff, they walk away with nothing. Sounds harsh. It's not. It's the whole point. You need twelve months to assess whether someone is actually going to contribute to the thing they're being given ownership of.

Some startups use three-year vesting. Some use milestone-based vesting instead of time-based (options vest when the company hits specific targets rather than after a set period). Some use a combination. EMI is flexible enough to accommodate whatever structure makes sense for your business. Just make sure it's documented clearly in the option agreement because ambiguity in vesting terms is one of the most common sources of disputes.

Good Leavers, Bad Leavers, and What Happens When Someone Leaves

This is the section I wish every founder would read before they set up their scheme. Because what happens when someone leaves is where EMI schemes either work beautifully or explode in everyone's face.

Good leaver: Typically defined as someone who leaves due to redundancy, retirement, death, disability, or circumstances the board considers to be "good leaving." A good leaver usually keeps their vested options and has a window (often 90 days, sometimes longer) to exercise them.

Bad leaver: Someone who's fired for cause, resigns voluntarily (depending on your scheme rules), or breaches their employment contract. A bad leaver typically forfeits all their options, both vested and unvested.

The grey area kills you. What about someone who leaves amicably after two years to take another job? Are they a good leaver or a bad leaver? What about someone who's made redundant after eighteen months? What about a founder-employee who steps back to part-time?

I've watched these conversations tear small teams apart. The employee thinks they're a good leaver. The company thinks they're a bad leaver. The option agreement is vague. Nobody wants to hire a lawyer. Everyone's angry.

Define it clearly upfront. Write specific scenarios into your option agreement. Make sure every employee understands, at the point of signing, exactly what happens to their options under every conceivable leaving scenario. This conversation is slightly uncomfortable when someone joins. It's devastating when they leave and the terms are unclear.

One more thing. If an employee leaves and has exercised their options (meaning they own actual shares, not just options), those shares don't disappear. They're a shareholder. They have rights. You can include drag-along provisions and compulsory transfer clauses in your articles of association to manage this, but you need to set those up before you grant any options. Your lawyer will handle this but only if you tell them to.

EMI vs CSOP vs Unapproved Options

Three types of share options. Different rules, different tax treatment, different use cases.

	EMI	CSOP	Unapproved
Max per employee	£250,000	£60,000	No limit
Company size limit	500 employees / £120M assets	None	None
Income tax on exercise	None (if exercise price >= AMV)	None (if held 3+ years)	Yes, full rate
NI on exercise	None	None	Yes
CGT rate (with BADR)	18% on first £1M	18-24% (BADR harder to access)	18-24%
Employer NI	None	None	15%
CT deduction for company	Yes	Yes	Yes
HMRC valuation required	Yes	No (but recommended)	No
Excluded sectors	Yes (banking, farming etc)	No	No

When to use EMI: Your company qualifies and the employee qualifies. Always use EMI when you can. The tax advantages are dramatically better than everything else.

When to use CSOP: Your company doesn't qualify for EMI (excluded sector, too large before 2026 changes) or the employee doesn't qualify (works less than 25 hours, owns more than 30%). CSOP has a £60,000 per employee limit which is restrictive but the tax treatment is still better than unapproved.

When to use unapproved: The employee doesn't qualify for either EMI or CSOP. Consultants, advisors, non-executive directors, part-time team members. The tax treatment is brutal, full income tax and NI on exercise, but sometimes unapproved options are the only option. You can't convert existing unapproved options into EMI retrospectively, but you can grant new EMI options alongside existing unapproved ones if the employee now qualifies.

How Much Does an EMI Scheme Cost to Set Up?

The range is wide and most founders are surprised in both directions. Surprised that DIY is possible and surprised that solicitors charge as much as they do.

Platform route (SeedLegals, Vestd):

SeedLegals charges £2,699/year for their Options subscription. Unlimited EMI schemes, unlimited valuations, unlimited support. Everything included.

Vestd starts at £25/month on their lower tiers but the full EMI service with unlimited holders is £4,200/year (or £5,040 paid monthly).

Both platforms handle the HMRC valuation, generate the legal documents, manage the cap table, and walk you through the process. If you're a startup doing this for the first time, a platform is almost certainly the right choice. You'll make fewer mistakes, the documentation is standardised, and the cost is predictable.

Solicitor route:

£4,000-£10,000+ for initial setup depending on the firm and complexity. Some boutique firms like The Mill Consultancy offer fixed-fee packages from around £3,000-£5,000. City law firms charge more. A lot more.

The solicitor route makes sense if your situation is complex, you have unusual share structures, you need bespoke vesting conditions, or you're raising a round simultaneously and want everything coordinated. For a standard EMI scheme with straightforward terms, a platform is usually sufficient and significantly cheaper.

DIY route:

Technically possible. HMRC provides the forms. You can draft your own scheme rules. You can submit your own valuation. I would strongly advise against this unless you or someone on your team has done it before. The consequences of getting it wrong, options losing their qualifying status, unexpected tax bills for employees, invalid documentation, are far more expensive than paying a platform £2,699 to do it properly. Add this to your startup costs budget and move on.

Ongoing costs:

The HMRC valuation is valid for 90 days. If you're hiring regularly, you'll need multiple valuations per year. On a platform, this is included. With a solicitor, each valuation costs £500-£1,500+. Annual ERS filing needs to happen every year by 6 July. Platforms automate this. Solicitors charge for it.

Common Mistakes Founders Make With EMI

Promising equity before setting up the scheme. "We'll sort you out with 2% once we get the paperwork done." Famous last words. I said them myself. The problem is that an informal promise creates expectations without legal structure. When you eventually formalise, the valuation might be different, the percentage might not work with your cap table, and the employee is disappointed. Set up the scheme first. Then make promises.

Missing the HMRC notification deadline. Notify HMRC by 6 July after the tax year in which you granted options. Miss this and your options lose their qualifying EMI status. They become unapproved options. Your employees now face income tax and NI on exercise instead of CGT. You've just accidentally made their equity worth 30-40% less. Set a calendar reminder. Better yet, use a platform that does it automatically.

Setting the exercise price too low. The exercise price must be at or above the Actual Market Value agreed with HMRC. If it's lower, the difference is taxed as income on exercise. Some founders try to set a low exercise price thinking it benefits the employee. It does the opposite. Get the HMRC valuation, set the price at AMV, and let the future growth be the employee's reward.

Not explaining the scheme to employees. I've met employees who received EMI options and had no idea what they were worth, how they worked, or what "vesting" meant. They just signed the paperwork because their boss told them to. That's a wasted retention tool. If your employee doesn't understand their equity, they can't be motivated by it. Sit down with every option holder and explain it properly. What the options are worth today. What they could be worth at exit. What happens if they leave. How the tax works.

Ignoring the annual ERS return. Even if nothing has changed, even if no options were granted or exercised during the year, you still need to file a nil return by 6 July. Failing to file can result in penalties and, in the worst case, your scheme losing its qualifying status. It takes five minutes. Just do it.

Not including drag-along and compulsory transfer provisions. If an employee exercises their options and then leaves, they own shares. Without proper provisions in your articles of association, you could end up with a disgruntled ex-employee as a minority shareholder with rights you didn't anticipate. Sort this before you grant any options.

The Conversation Nobody Wants to Have

I'm going to say something that might be controversial in a guide about EMI schemes: most employees don't understand their options and most founders don't explain them properly. Both sides are failing.

I've sat in on conversations at our events where a founder proudly says "yeah, we gave her 1% of the company" and the employee in question has no idea what 1% means in actual money. Is it £1,000? £100,000? £1,000,000? Depends entirely on the valuation at exit, which depends on about fifty things nobody can predict. But the employee heard "1%" and mentally calculated it against a number they made up in their head. Usually that number is too high.

Here's what you should tell every employee when you grant them EMI options:

"These options give you the right to buy X shares at Y pence each. Right now those shares are worth Z pence each, so the options are essentially worth nothing on day one. If the company is sold for £A million, your shares would be worth roughly £B before tax. You'd pay 18% CGT if you've held them for two years, so you'd take home approximately £C. If the company fails, your options are worth nothing. Most startups fail. These options are a bet on the company succeeding, not a guarantee of anything."

That conversation takes five minutes. It sets expectations correctly. It prevents the "but I thought my equity was worth..." conversation that happens at exit when the maths doesn't match what the employee imagined. And it demonstrates respect for your employee's intelligence rather than hiding behind jargon and hoping they don't ask questions.

I've watched founders avoid this conversation because they're worried it'll put the employee off. It won't. What puts employees off is finding out three years later that their "1% of the company" is worth less than they assumed because they didn't understand dilution, liquidation preferences, or what "fully diluted" means. Honesty upfront is always cheaper than disappointment later.

If you want your EMI scheme to actually retain people, they need to understand it. That's on you as the founder, not on them as the employee.

What Happens at Exit

This is what everyone's actually waiting for. What happens when the company gets acquired, goes public, or has a secondary sale?

Acquisition: The most common exit for UK startups. The acquirer buys all the shares. EMI option holders exercise their options (buy shares at the exercise price) and then immediately sell them to the acquirer. The gain between the exercise price and the sale price is taxed as Capital Gains. With BADR (if held 2+ years), the rate is 18% on the first £1 million. If you're not at exit stage yet and still raising your seed round, EMI options granted now will be worth dramatically more by the time an exit happens.

A founder in our community sold his company last year. His lead developer had been granted EMI options four years earlier at an exercise price of £0.10 per share. The acquisition valued the shares at £4.80 each. She exercised and sold on the same day - paid £2,000 to exercise, received £96,000 from the sale. Her tax bill at 18% BADR was about £17,000. She took home roughly £77,000. Without EMI, that same gain would have been taxed as income - she'd have kept maybe £50,000. Twenty-seven grand difference. She told me afterwards that she'd never fully understood what the options were worth until the cheque landed. "I just signed the paperwork when I joined because James told me to." That sentence haunts me because it means she spent four years not being properly motivated by the thing that was supposed to motivate her.

IPO: Option holders exercise their options and receive shares in the publicly traded company. They can hold or sell. CGT applies when they eventually sell. BADR may apply if the conditions are met at the time of disposal.

Secondary sale: Increasingly common in later-stage startups. Existing shareholders sell some shares to new investors or on platforms like PISCES. From April 2026, EMI and CSOP options can include PISCES as an exercise event. Option holders can exercise and sell without waiting for a full acquisition.

The key thing for founders: make sure your option agreements specify which events trigger exercise. Some schemes only allow exercise on a "sale of the company." Others allow exercise on IPO, secondary sale, or at the board's discretion. The broader the exercise triggers, the more flexibility your option holders have. But broader triggers also mean less control for the board. If you're heading toward a raise and need to understand how EMI affects your startup valuation, that's a separate but related conversation.

FAQs

What is an EMI scheme?

An Enterprise Management Incentives scheme is a tax-advantaged share option plan for UK companies with fewer than 500 employees and under £120 million in gross assets. It lets you give employees options to buy shares at a price agreed with HMRC, with no income tax or NI on grant or exercise.

How much does an EMI scheme cost to set up?

£2,699/year on SeedLegals or £4,200/year on Vestd for the platform route. £3,000-£10,000+ for a solicitor. DIY is technically possible but risky.

What changed about EMI in April 2026?

Employee limit doubled from 250 to 500. Gross assets limit quadrupled from £30 million to £120 million. Company option pool doubled from £3 million to £6 million. Exercise window extended from 10 to 15 years. These are the biggest changes since EMI began.

Do employees pay tax on EMI options?

No income tax or NI on grant or exercise if the exercise price is at or above the HMRC-agreed market value. When shares are sold, gains are taxed as Capital Gains Tax at 18% (with BADR) or 18-24% (without). Compare that to up to 45% income tax plus NI on unapproved options.

What's the difference between EMI and CSOP?

EMI is better. Higher limits (£250,000 vs £60,000), better tax treatment, easier BADR access after 2 years. Use CSOP only if you don't qualify for EMI.

Can consultants or contractors get EMI options?

Na. EMI is for employees only. They must work at least 25 hours per week or spend 75%+ of their working time on your company. Consultants, advisors, and NEDs need unapproved options instead, which have worse tax treatment.

What happens to EMI options if an employee leaves?

Depends on whether they're classified as a good leaver or bad leaver under your scheme rules. Good leavers typically keep vested options and have 90 days to exercise. Bad leavers typically forfeit everything. Define these terms clearly before you grant any options.

How long does an HMRC EMI valuation take?

HMRC aims to respond within 30 working days. In practice it can take longer, especially around tax year end when they're busy. The valuation is valid for 90 days once agreed. Plan your grant timing accordingly.

Can I set up an EMI scheme alongside existing unapproved options?

Yes. You can grant new EMI options to employees who previously received unapproved options. You can't convert existing unapproved options into EMI retrospectively, but you can run both schemes side by side.

Written by @James Beresford-Morgan, co-founder of Startup Networks. I set up our EMI scheme later than I should have and it cost us time, money, and some uncomfortable conversations. If this guide saves you from making the same mistake, it's done its job.

This is part of our equity and compensation series. For SEIS and EIS tax relief on investment, read our SEIS/EIS guide. For raising your first round, see our pre-seed funding guide. Planning your exit? Our exit strategies guide covers what happens when EMI options actually pay out. Need a pitch deck for investors? Check our pitch deck guide. Or discuss EMI setup with other founders in our forum.

Last updated: July 2026. EMI eligibility changes from Finance Act 2026, announced Autumn Budget 2025. Tax rates confirmed for 2026/27 from HMRC. BADR rate of 18% from 6 April 2026. SeedLegals pricing from seedlegals.com (July 2026). Vestd pricing from vestd.com (July 2026). Solicitor cost ranges from AccountingWEB and The Mill Consultancy. Corporation Tax deduction guidance from GoFile and Saffery. Grant notification changes from Practical Law (Thomson Reuters).

Good post James I know a couple of guys who have gone through this, happy to speak to you about it when we chat next!

See if we can update the article with some more insights about EMI schemes from the perspective of our small community

Oof, this is a rite of passage and an expensive one. The trap is that equity feels free when you're promising it, it's not cash leaving the account today, so it's easy to hand out in a moment of 'I really want this person'. Then the bill (tax, or a messy cap table, or an awkward renegotiation) turns up much later.

Two things I wish more founders heard early. Get your EMI valuation agreed with HMRC before you promise anything, it's less painful than it sounds and it's the difference between that 18% CGT outcome and your hire getting hit with income tax and NI on the spread. And put the actual terms (vesting, cliff, what happens if they leave) in writing at grant, not 'we'll sort the paperwork later', because the later is where the pain lives.

Not advice, just scar tissue, but the cleanest founders I know treat the cap table with the same discipline as the bank account. Both quietly compound, for better or worse. Good on you for posting this, more people should.