More companies than ever are running employee share schemes. The government is widening access, with EMI expanding in 2026. And employees themselves are intently seeking out the companies that offer the best options.
So far, so good. But setting up a share scheme and joining the party is only half the battle.
Keeping it alive – through clear communication, fair compensation, and a credible route to liquidity – is where the real work begins.
Setting up the share scheme is just the start.
Get it right, and you’ll build a scheme that serves you and your team for years to come.
Here's how to do it.
Over 20,000 UK companies now run tax-advantaged share schemes, delivering £1.29 billion in combined income tax and NIC relief in 2023/24. That's an 18% increase year-on-year.
But what’s driving it? The triggers for offering equity tend to fall into three camps.
The first is commercial. Salaries keep climbing, skilled people are hard to pin down, and annual bonuses get baked into expectations almost immediately. At some point, founders want to reward key players to boost retention.
The second is timing and intent. Many founders want to share ownership early while the company is still in its infancy. Once valuations increase and the cap table becomes more complex, carving out equity for your team may require more work. It’s still very much doable. But the goal is open when your team is small.
The third is talent competition. Experienced hires weigh up base pay, bonuses, and potential equity upside. If a candidate can secure a meaningful stake in a company with broadly similar prospects, the pressure is on to match or exceed those prospects.
The numbers back this up.
Recent data from the Social Market Foundation found that 58% of employees agreed that share ownership would make them more motivated at work, and 60% said it would incentivise them to stay with their employer longer than originally intended.
HMRC's own call for evidence on EMI – to which Vestd submitted one of the largest responses – found unanimous agreement that the scheme helps SMEs recruit and retain key employees.
So the case for offering equity is strong, and adoption is accelerating. But a share scheme can tick every box on paper and still fall flat if people don't understand it, don't trust it, or never see a penny from it.
If you've been circling the idea of an employee share incentive without committing, you're in good company. The concept is appealing, but the practicalities raise questions. Here are some reasons for hesitation – and why they're worth working through rather than working around:
"We don't know what we'd be solving”: Equity works best when it's tied to a specific goal, such as retaining key team members for the next X years, incentivising a leadership team through a growth phase, or rewarding early risk-takers. If the rationale is "alignment" in the abstract, the scheme risks being technically sound but commercially vague. Nail the purpose first.
"Putting a number on the business feels premature": A share scheme means committing to a valuation and standing behind it. That's uncomfortable when the business is young, or the path to a liquidity event isn't obvious. But the alternative – avoiding the conversation entirely – usually means missing the window when equity is simplest to offer.
"The admin sounds relentless”: Joiners, leavers, vesting schedules, payroll coordination, annual reporting – even a straightforward scheme brings new operational duties. Without a clear plan for running the scheme, it becomes a permanent internal project rather than a reward mechanism.
"People will expect a payout we can't guarantee”: This is a fair concern. Employees tend to hear "equity" and mentally bank a future windfall. If you don’t communicate the possibility of flat valuations, delayed exits, and tax bills at awkward moments, tension could brew down the line.
"We haven't figured out dilution”: An option pool is an economic transfer that becomes visible at the next funding round or exit. Every refresh grant is similarly a decision about who bears the cost, such as existing shareholders, future investors, or employees, through a smaller pool down the line. Being comfortable with that conversation early saves tension later.
None of these are reasons to walk away. They just highlight the importance of putting the right foundations in place.
When a company can't quite match market salaries, it may turn to equity to bridge the gap..."We can't pay you £90k, but here are some options that could be worth a lot more down the line."
It's well-intentioned, but employees see through it. People need their salary to live. Equity is about giving someone a reason to care about where the business goes over the next three, five, or ten years.
The two work best in tandem, but neither makes up for the other's shortcomings.
This is an incredibly important principle to get right. Naturally, senior leadership are already ambitious about the business.
As it grows, the rewards grow, not just financially but also in terms of your accomplishments and contributions. Equity embeds that philosophy across your team, especially in the critical early days.
Of course, the strategy can evolve. Even mature companies can use schemes like EMI and CSOP to keep that sense of shared ownership alive as the business scales. Or explore more flexible equity incentives, such as growth shares or unapproved options.
Equity is jargon-laden – vesting schedules, strike prices, exercise windows, good-leaver and bad-leaver provisions, and so on.
When HMRC gathered feedback on how well UK share schemes were working, respondents reported they often don't even view their share plans as part of their compensation. They viewed them as vaguely beneficial and didn’t understand them well.
ProShare's Attitudes to Employee Share Ownership study similarly found that 47% of Millennials opted out of SIP schemes because they didn't think they'd be with the company long enough to benefit, suggesting the timelines and vesting mechanics weren't landing.
This is actually a brilliant opportunity to beat competitors who poorly communicate or neglect their share schemes. A few key strategies to differentiate:
Accessible explainers at every stage: At launch, when you offer option grants, when your team achieves vesting milestones, and when anything changes.
Visibility of value: Show employees what their stake is worth, how it's changed, and what it could look like under different scenarios. Personal dashboards make equity tangible.
Tying shares to the company story: When you hit a growth milestone, close a round, or land a major contract, connect it back to equity. Show how business progress translates into the potential upside.
Celebrating the scheme: Treat vesting milestones the way you'd treat a work anniversary or a promotion. Recognition reinforces that equity is real, valuable, and worth paying attention to.
Every communication touchpoint reinforces the message that this is yours, it's growing, and it's worth your attention. Share option schemes are a positive action for a business and its team and ought to be represented as such.
It’s no secret that companies are staying private for longer. PE holding periods have stretched to around 5.3 years, up from 4.1 in 2020. Only 5% of PE divestments in 2024 happened via IPO.
With 88 companies delisting from the London Stock Exchange last year and 18 new listings replacing them, the traditional public exit route is clearly evolving.
Employees will naturally wonder: do exits or liquidity events materialise? Do the agreement terms feel fair in hindsight? And do early employees feel more recognised than later joiners?
It’s worth thinking through early on, and the good news is, choices for creating liquidity without a full exit are expanding: enter secondary markets.
Private secondary share sales – in which existing shareholders sell shares to new investors without the company issuing new equity – were once rare.
Now they're increasingly part of the plan for companies seeking liquidity without a traditional exit. Employees turn equity into cash, founders ease personal financial pressure, and investors demonstrate returns – all without an IPO or acquisition.
The government's new PISCES framework (the Private Intermittent Securities and Capital Exchange System) establishes FCA-regulated trading windows in which private company shareholders can sell existing shares through a structured auction, without going public or diluting anyone.
Companies retain control over who can buy, how much can be sold, and when events take place. EMI and CSOP options can now include a PISCES sale as an exercise event, and trades are exempt from stamp duty.
Early employees take on more risk. Making a few deliberate choices preserves trust:
Refresh grants: Revisiting allocations as the company matures, so early risk-takers don't get left behind.
Dilution awareness: Helping employees understand how funding rounds affect their stake and what protections are in place.
Cap table transparency: Visibility into how ownership is developing, rather than leaving them to guess or assume the worst.
When communication with early joiners is strong, they become advocates of the scheme itself, talking it up to newer colleagues, answering questions from experience, and giving the programme credibility beyond your comms deck.
The case for employee ownership is strong, and it's getting stronger. The tax benefits of HMRC-approved schemes like EMI are already excellent and expanding from April 2026.
But a well-designed scheme needs more than functional mechanics. It needs clear, ongoing communication. It needs a realistic liquidity pathway, even if imperfect, or a few years away. And it needs to treat fairness – especially for early employees – as a core design principle.
Get those things right, and equity becomes one of your most powerful growth levers, giving your team a reason to enjoy the journey rather than just the destination.
Vestd helps you set up and administer share schemes that your people can understand and engage with.
From scheme design and cap table management to valuations, ongoing communication, and keeping your equity house in order for when liquidity opportunities arise, we handle the heavy lifting so you can focus on building.
Book a free consultation to find out more. In the meantime, why not read our Good Share Scheme guide?