Management incentive schemes that keep your best people
Give your key people a real stake in the business they help to build, in a way that is tax-efficient for them and for you.
Shares and share options are one of the most effective ways to attract, reward and keep the people who drive your business. Set up properly, a tax-advantaged scheme can mean your team pays capital gains tax on the growth in value, rather than income tax and National Insurance.
We help you choose the right scheme, value the shares, work with your solicitor on the documents, and handle the HMRC notifications and annual returns that keep the scheme valid.
- 1We understand who you want to reward and why
- 2We recommend the right scheme
- 3We value the shares
- 4We work with your solicitor on the documents
- 5We register the scheme and notify HMRC
- 6We file the annual returns and review the scheme as you grow
Who benefits, and how
A well-designed scheme is one of the few things in business that works for everyone at the same time. It rewards growth rather than costing you salary, and it gives your team the same reason to build value that you have.
Owners and shareholders
- Keep the people who drive the business, tied to the outcome you are working towards: growth, a sale or a handover.
- No cash cost to grant. The reward comes from future growth in value, not from your profits or payroll.
- The company can usually claim a corporation tax deduction when employees acquire their shares.
- You stay in control of who takes part, how much, when it vests and what happens if someone leaves.
- A natural route to succession, whether that is a management buy-out or a gradual handover.
Your management team
- A real stake in the value they help to create, not just a bonus.
- With EMI options granted at market value, usually no income tax or National Insurance when they exercise. The growth is taxed as a capital gain when they sell.
- EMI shares can qualify for Business Asset Disposal Relief at 18% on up to £1 million of lifetime gains, without the usual 5% shareholding, once the option has been held for two years.
- Clear, written terms on what happens if they leave, if the company is sold, or if targets are met.
The business
- Recruit and keep strong people without matching big-company salaries.
- Managers who think like owners make decisions with the long term in mind.
- A committed management team, locked in through a sale, makes the business more valuable to buyers and investors.
Which scheme fits
There is no single best scheme. The right one depends on your company, the people you want to reward and what you want to happen on a sale. These are the four we use most.
Enterprise Management Incentives (EMI)
The most tax-efficient option scheme for qualifying companies.
- Who can use it
- Independent trading companies with gross assets up to £120 million and fewer than 500 employees (options granted from 6 April 2026). Some trades are excluded.
- Limits
- Up to £250,000 of options per employee, £6 million across the company.
- Tax for the employee
- Usually no income tax or National Insurance on exercise if granted at market value. Capital gains tax on sale, often at 18% with Business Asset Disposal Relief.
Company Share Option Plan (CSOP)
A tax-advantaged scheme for companies that don't qualify for EMI.
- Who can use it
- Most independent companies, whatever their size or trade.
- Limits
- Up to £60,000 of options per employee.
- Tax for the employee
- No income tax or National Insurance if exercised at least three years after grant (or earlier in some cases, such as a good leaver). Capital gains tax on sale.
Growth shares
A new class of shares that only shares in value created from today.
- Who can use it
- Any company. Often used alongside, or instead of, options.
- Limits
- None set by HMRC. You decide the hurdle and the size of the pool.
- Tax for the employee
- Income tax only on what the shares are worth when issued, which is often small. The growth is taxed as a capital gain.
Unapproved options
Fully flexible, for people or companies outside the other schemes.
- Who can use it
- Any company, any employee or adviser.
- Limits
- None.
- Tax for the employee
- Income tax (and sometimes National Insurance) on the gain when the option is exercised.
Limits and rates are those in force for 2026/27. EMI excludes some trades, including property development, financial activities, and legal and accountancy services, and the employee must work at least 25 hours a week (or 75% of their working time) for the company.
Getting the value right
The tax advantages of a scheme rest on the share value at the date of grant. Too high and your team pays more than they need to; too low and HMRC can challenge it.
We value the shares and, for EMI and CSOP, agree the value with HMRC's Shares and Assets Valuation team before the options are granted, so everyone knows where they stand.
Planning for a sale
Many owners want their managers rewarded when the business is sold, not before. Options can be made exercisable only on a sale, with vesting and performance conditions to match your plans.
If you are thinking about stepping back, a scheme can sit alongside a management buy-out or a sale to an Employee Ownership Trust. We help you look at the routes together.
Keeping the scheme valid
Tax-advantaged schemes come with deadlines that are easy to miss, and missing one can cost your team the tax relief.
- EMI option grants must be notified to HMRC by 6 July after the end of the tax year of grant.
- Every scheme needs an annual employment-related securities return by 6 July.
- Changes to the company, the share capital or someone's role can affect qualification. We review the scheme with you as things change.
Questions we’re often asked
Will a scheme dilute my shareholding?
Yes, when the options are exercised. You decide how large the pool is, and the aim is a smaller share of a more valuable business. We model the effect on your own stake before anything is granted.
What happens if a manager leaves?
Your scheme rules decide, usually with different terms for good and bad leavers. Under EMI, options exercised within 90 days of leaving keep their tax advantages.
Can a family or owner-managed company have a scheme?
Yes. Most of the schemes we set up are for privately owned businesses, often to bring a key manager or the next generation into ownership.
Do I need a solicitor as well?
Usually, yes. We design the scheme, value the shares and handle HMRC; your solicitor drafts the scheme rules and option agreements. We work with yours, or can introduce one.
Rules and limits checked 9 October 2026.
Talk to us about your tax.
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