What is a share option scheme?
A share option scheme gives someone - usually an employee - the right to buy shares in your company in the future, at a fixed price (called the exercise price).
The idea is simple: as your Swansea-based business becomes more valuable, so do the options. It's a long-term reward that creates loyalty, ownership and drive.
Swansea founders love it because:
- 💷You can offer value without raising salaries
- 🧠Employees feel more motivated and committed
- 💡Keeps your cash burn low and team morale high
Types of schemes - EMI vs unapproved
Get help choosing the scheme that's right for your team. Here's how they compare:
| Feature | EMI (Enterprise Management Incentive) | Unapproved share options |
|---|---|---|
| FeatureTax benefits for employee | EMI (Enterprise Management Incentive)✅ Yes - 14% CGT via Business Asset Disposal Relief (BADR) | Unapproved share options❌ No - income tax due on gain |
| FeatureWorks for UK employees | EMI (Enterprise Management Incentive)✅ Yes | Unapproved share options✅ Yes |
| FeatureWorks for contractors/freelancers | EMI (Enterprise Management Incentive)❌ No | Unapproved share options✅ Yes |
| FeatureMost common use case | EMI (Enterprise Management Incentive)Swansea startups with UK-based staff | Unapproved share optionsGlobal teams, advisors |
How long does it take to launch an option scheme?
With our partner, your option scheme can be fully set up in as little as 5-7 weeks.
| Stage | What Happens | Typical Timing |
|---|---|---|
| StageCreate option pool | What HappensDecide how much equity to allocate | Typical TimingDay 1 |
| StageChoose scheme type | What HappensSelect EMI or unapproved scheme | Typical TimingDay 1 |
| StageUpload documents | What HappensProvide shareholder agreement, cap table, and other necessary documents | Typical TimingDays 1-3 |
| StageDraft agreements | What HappensOur partner prepares all legal documentation | Typical TimingDays 3-5 |
| StageEMI valuation | What HappensSubmit valuation to HMRC; wait for approval | Typical Timing4-6 weeks (HMRC processing time) |
| StageOptions issued | What HappensGrant options to your team | Typical TimingWithin 90 days of HMRC valuation approval |
Note - HMRC valuations are valid for 90 days from the date of agreement. It's crucial to grant options within this period to maintain the agreed valuation for your Swansea business.
What is vesting? What is a cliff?
Most startups in Swansea don't give all options at once. Instead, they vest over time. Here's how that works:
- Cliff - The first chunk of options only vests after a set period (e.g. 1 year)
- Vesting schedule - After the cliff, more options vest gradually over time - usually monthly or quarterly
Example: 4-year vesting with a 1-year cliff means:
- 📅0% earned until 12 months
- 🎯25% vests after 1 year
- 📈The rest vests monthly over the next 3 years
What happens when someone leaves?
You set the rules, then our partner puts them in writing. Here's a typical setup:
| Scenario | What happens to their options? |
|---|---|
| Leaves before cliff ends | ❌ All options lapse (they lose them) |
| Leaves after cliff voluntarily | ✅ Keep vested options only |
| Fired for misconduct | ❌ Lose everything (customisable) |
| Company sells before full vesting | 🔁 Option for accelerated vesting |
You can customise your leaver policy for your Swansea business, or get advice from an expert if you're unsure of what you want to do.
Why skipping a share option scheme could cost your Swansea startup
Startups in Swansea that skip option schemes face real downsides:
- Struggle to hire top talent (especially in tech)
- Burn more cash to stay competitive with comp packages
- Higher team turnover - there's no reason to stick around
- Missed alignment between founder and team goals
If you're raising money, investors expect a share option pool. If you're hiring, great people ask for it. In the Swansea startup ecosystem, it's now expected.
What do you need to do after setup?
Our partner supports ongoing compliance too. After options are granted, you need to:
- 📨File EMI notifications with HMRC
- 📄Update your cap table
- 📬Share option certificates and contracts
- 🔁Process leavers, exercises, and new joiners
What's included in the service?
Our partner provides unlimited share option grants, valuations, and support for £2,490 + VAT per year:
- Full option scheme setup and legal documentation
- HMRC valuation and submission
- Ongoing compliance support
- Unlimited option grants and updates
- Expert guidance from HMRC-qualified specialists
- Cap table management and maintenance
FAQs about option schemes for Swansea startups
What's the difference between shares and share options?
Shares give immediate ownership. Options give the right to buy shares later.
Do I need to be a limited company to offer options?
Yes - EMI is for UK limited companies. Our partner can help check if you qualify.
Can I issue options after raising funding?
Yes - and many investors will ask you to create an option pool.
Can I grant options to overseas employees or freelancers?
Yes, with an unapproved scheme. EMI is for UK employees only.
Do I need to value my company?
Only for EMI schemes. Our partner can help you get HMRC approval.
How much does it cost?
Our partner provides unlimited share option grants, valuations, and support for £2,490 + VAT per year.
Final thoughts
Your team deserves a reason to stay and a chance to share in your success.
Our partner helps Swansea businesses launch a professional, HMRC-compliant option scheme in 5-7 weeks - with everything done for you.
