Sharing equity is one of the most effective ways to align your team with the business, but getting the structure and HMRC process right matters just as much as the decision to do it. At Folio Partners, we guide you through scheme design, valuations, and compliance, explaining each step clearly so you and your team know exactly where things stand.
In our experience, to successfully implement an employee share scheme, there are a few golden rules:
Getting the valuation right is often the most overlooked part, and the part HMRC scrutinises hardest. Whatever scheme you choose, the share price you set has to be defensible today and hold up months or years later. We build that evidence in from the start, using the same real market and transaction data behind our business valuations work, so the numbers stand up when it counts.
Enterprise Management Incentive, or EMI, is the share option scheme most UK SMEs use, and it's usually the first one worth ruling in or out before looking at anything else. It's HMRC-approved, tax-advantaged for both the company and the employee, and built around granting options rather than handing over shares outright, so you keep control of timing and structure.
Not every company qualifies. EMI has limits on company size, gross assets, independence, and the value of options any one employee can hold, and those thresholds sit with HMRC rather than us. We'll take you through what applies to your business specifically as part of the process, rather than listing generic numbers here that can go stale.
EMI doesn't work for every business. Some companies are too large, some don't meet the independence test, and some want a scheme with a different shape entirely. CSOP (Company Share Option Plan) and SIP (Share Incentive Plan) are the two most common alternatives, and we'll help you work out early on whether one of those fits better than forcing an EMI scheme that doesn't.
A team that has a real stake in the business tends to act like it, more engaged, more invested in the outcome, and more aligned with what you're trying to build, and that shows up in performance, retention and the value of the business over time.
There are a number of different ways to share equity with your employees, and the right one depends on your business and what you want to achieve.
At Folio Partners, we guide you and your team through the whole process, from dealing with HMRC to preparing the necessary agreements and explaining everything to your employees in plain, jargon-free terms.
We recently helped a growing digital marketing agency put share options in place alongside a wider group restructuring, balancing valuation, HMRC approval and long term investment plans. Read how that came together in our case study.
