--- title: "EMI vs CSOP vs Growth Shares: Tax-Efficient Equity for Your First Hires | Hypergility" description: "A founder's guide to EMI, CSOP and growth shares — the three main UK tax-efficient equity schemes, when to use each, and how to avoid common mistakes." lang: en json-ld: | { "@context": "https://schema.org", "@type": "BlogPosting", "headline": "EMI vs CSOP vs Growth Shares: Tax-Efficient Equity for Your First Hires", "description": "A founder's guide to EMI, CSOP and growth shares — the three main UK tax-efficient equity schemes, when to use each, and how to avoid common mistakes.", "author": [ { "@type": "Person", "name": "Mark Preston" }, { "@type": "Person", "name": "Don MacMillan" } ], "datePublished": "2026-05-05T11:00:00+00:00", "dateModified": "2026-05-21T16:28:51.808646+00:00", "image": "https://aaiqevwzojrlzhxdxxzq.supabase.co/storage/v1/object/public/media-processed/blog-heroes/emi-csop-growth-shares-tax-efficient-equity-uk.jpg", "keywords": "Build & ship", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://www.hypergility.com/blog/emi-csop-growth-shares-tax-efficient-equity-uk" }, "citation": [ { "@type": "CreativeWork", "name": "HMRC — Employee Share Schemes Statistics June 2024", "url": "https://www.gov.uk/government/statistics/employee-share-schemes-statistics" } ], "publisher": { "@type": "Organization", "name": "Hypergility", "url": "https://www.hypergility.com" } } --- [![Hypergility](/assets/hypergility-logo-BKOgRT51.png)for bold startups ](/) Services [Startup Grower](https://startupgrower.hypergility.io/)[Website Build](/build-your-website)[Public Sector Bids](/offerings/win-public-sector-bids)[Management Systems & Assurance](/services/management-systems) Who it's for [Are you a bold founder?](/are-you-a-bold-founder)[Innovation Hubs](/partners/innovation-hubs)[Universities](/partners/universities)[Researchers](/personas/researchers) [Why us](/why-us)[News](/news)[Try Startup Grower](https://startupgrower.hypergility.io/)[Contact](/contact) [Back to News](/news) ![EMI vs CSOP vs Growth Shares: Tax-Efficient Equity for Your First Hires](https://aaiqevwzojrlzhxdxxzq.supabase.co/storage/v1/object/public/media-processed/blog-heroes/emi-csop-growth-shares-tax-efficient-equity-uk.jpg) Build & ship # EMI vs CSOP vs Growth Shares: Tax-Efficient Equity for Your First Hires Mark Preston & Don MacMillan May 5, 2026 Equity is the most powerful retention tool a startup has — and the easiest to mishandle. Hand it out informally and you create unexpected income tax bills, NIC liabilities and angry employees. Use the right HMRC-approved scheme and the same equity becomes a 10% capital gains event with the team firmly aligned to the exit. ## EMI — the gold standard for early-stage UK startups **Who can use it.** Trading companies with under 250 employees, gross assets under £30m, and not in an excluded sector. Most software, AI and tech companies qualify. **How it works.** Employees are granted options at a strike price agreed with HMRC. No income tax or NIC on grant. On exercise, no income tax (assuming strike price equals or exceeds market value at grant). On sale, gains taxed at Business Asset Disposal Relief rates — 14% from April 2025 — up to £1m lifetime allowance. **The catch.** Limits: £250k of options per employee, £3m company-wide. Working time test (25 hours/week or 75% of working time). ## CSOP — when EMI is not available Company Share Option Plan suits larger or later-stage companies that have outgrown EMI. The 2023 reforms doubled the limit to £60k per employee and removed the share class restrictions. Tax treatment is similar to EMI but without the BADR rate on exit — gains taxed at standard CGT rates (24% from April 2025). ## Growth shares — when options will not work Useful when EMI/CSOP do not fit (e.g. non-employees, advisors, contractors, or co-founders joining post-incorporation). Growth shares are a separate share class with a hurdle — they only have value above a defined threshold (typically current valuation). Holders pay a small amount for them upfront, and all future growth is taxed as capital gains. **The trap.** Get the hurdle wrong (set too low) and HMRC treats the difference as employment income — disastrous tax bill. Always get a valuation. ## How to choose - UK employees, eligible company → EMI almost always wins. - Larger company or non-qualifying sector → CSOP. - Advisors, contractors, non-UK people, or unusual structures → growth shares. - Need to share value but cannot dilute the cap table → phantom equity (cash-settled) — different beast, separate post. ## What to avoid - Verbal promises of equity — legally messy, taxed as income when honoured. - Granting options without a board minute and HMRC valuation — voids the EMI tax treatment. - Forgetting to file the annual ERS return (deadline 6 July) — automatic penalties. - Letting departing leavers keep vested options indefinitely — clogs the cap table for years. Grower walks you through this — and the rest of the founder journey — week by week, induced with our domain expertise. [Try Grower](https://startupgrower.hypergility.io) > “EMI options are the most generous employee equity scheme in the developed world. If you qualify, the question isn't whether — it's how fast you can get the valuation agreed.” — Suzanne Lock , founder, Suzanne Lock Business Services ## Sources 1. [HMRC — Employee Share Schemes Statistics June 2024](https://www.gov.uk/government/statistics/employee-share-schemes-statistics) Trusted by clients & partners ## Clients and partners we work with [![Sussex Innovation](/trusted-logos/sussex-innovation.png)](https://www.sussexinnovation.co.uk/)[![Aqueous Digital](/trusted-logos/aqueous-digital.png)](https://www.aqueous-digital.co.uk/)[![The Growth Orchard](/trusted-logos/growth-orchard.png)](https://thegrowthorchard.co.uk/)[![GovForms](/trusted-logos/govforms.png)](https://govforms.co.uk/)[![SITA](/trusted-logos/sita.png)](https://www.sita.aero/)[![University of Sussex](/trusted-logos/university-of-sussex.png)](https://www.sussex.ac.uk/) As seen at ## Where we show up in the community [![BrightonAI Show and Tell](/trusted-logos/brightonai.png)](https://brightonai.org) Certifications ## Standards we are independently certified against [ ![ISO 9001 Badge](/assets/iso-9001-DeXtyob9.svg) ISO 9001 Quality Management ](/we-are-iso-9001-company-certified)[ ![ISO 27001 Badge](/assets/iso-27001-BiHzm-R-.svg) ISO 27001 Information Security ](/we-are-iso-27001-company-certified)[ ![ISO 42001 Badge](/assets/iso-42001-WNouqNfX.svg) ISO 42001 AI Management System ](/we-are-iso-42001-company-certified)[ Cyber Essentials UK Cyber Security ](/we-are-cyber-essentials-certified)[ Cyber Essentials Plus Independently verified ](/we-are-cyber-essentials-plus-certified) [![Hypergility](/assets/hypergility-logo-BKOgRT51.png)](/) People and our AI companion — challenging you, not just agreeing Making ideas investable For founders — we help you shape it, set it up, build it and monetise it. [Try Grower](https://startupgrower.hypergility.io/)[](https://www.linkedin.com/company/hypergility) #### Starting out Lane overviews - [Starting out](/starting-out) - [Are you a bold founder?](/are-you-a-bold-founder) - [The Startup In You](/the-startup-in-you) - [Resources in play](/resources-in-play) Stepping up - [Overview](/stepping-up) - [Researchers](/personas/researchers) - [Sales rainmakers](/personas/sales-rainmakers) - [Tech wizards](/personas/tech-wizards) - [Domain experts](/personas/domain-experts) - [Creative designers](/personas/creative-designers) - [Voluntary redundancy](/personas/voluntary-redundancy) - [Retiring, not done](/personas/retiring-not-done) No job, need a path - [Overview](/no-job-need-a-path) - [Made redundant](/personas/made-redundant) - [End of contract](/personas/end-of-contract) - [Mutually parted ways](/personas/mutually-parted-ways) - [Resigned](/personas/resigned) - [Pushed out, can't get back](/personas/pushed-out-cant-get-back) - [Overqualified / age barriers](/personas/overqualified-age-barriers) - [Returning after a break](/personas/returning-after-break) - [Retired, need income](/personas/retired-need-income) - [Never employed](/personas/never-employed) - [Grads, no offers](/personas/grads-no-offers) Fitting it in - [Overview](/fitting-it-in) - [Students / college](/personas/students) - [Side hustlers](/personas/side-hustlers) - [Work returners](/personas/work-returners) - [Career changers](/personas/career-changers) - [Family duties](/personas/family-duties) - [Health / disability barriers](/personas/health-disability-barriers) - [Post-prison](/personas/post-prison) - [Underrepresented founders](/personas/underrepresented-founders) #### Resources in play Lane overviews - [Resources](/resources) - [Roadmap](/roadmap) - [News & insights](/news) Short runway - [Overview](/short-runway) - [Cash crunch](/personas/cash-crunch) - [Turnaround / restructure](/personas/turnaround) - [Distressed](/personas/distressed) - [Preserve, or pivot](/personas/preserve-or-pivot) Resourced and reloading - [Overview](/resourced-and-reloading) - [Successful exiters](/personas/successful-exiters) - [Go-again success seekers](/personas/go-again) - [Post-raise reset](/personas/post-raise-reset) - [Pre-series A](/personas/pre-series-a) - [Grant-funded R&D](/personas/grant-funded-rd) - [Money inheritors](/personas/money-inheritors) Struggling with investors - [Overview](/struggling-with-investors) - [Pitch isn't landing](/personas/pitch-not-landing) - [Wrong room, wrong investors](/personas/wrong-room) - [Term-sheet stalled](/personas/term-sheet-stalled) - [Bridge or down-round](/personas/bridge-or-down-round) - [Post-rejection reset](/personas/post-rejection-reset) #### Startup Grower - [Grower overview](/grower) - [Validate](/grower/validate) - [Pitch](/grower/pitch) - [First customer](/grower/first-customer) - [Brand site](/grower/brand-site) - [Open Grower app](https://startupgrower.hypergility.io/) - [Website Build](/build-your-website) - [Public Sector BidsLater ](/offerings/win-public-sector-bids) - [All offerings](/all-offerings) - [Pricing](/pricing) - [Roadmap](/roadmap) #### Capabilities - [AI safety](/ai-safety) - [R&D claims](/rnd-claims) - [Smarter IP](/smarter-ip) - [Trust & certifications](/trust) #### Company - [Privacy](/privacy-policy) - [Cookies](/cookie-policy) - [Terms](/terms-of-use) - [Use policy](/use-policy) - [ICO registration](/ico-registration) - [AI ethics](/ai-ethics) - [IP statement](/ip-statement) - [Image attribution](/image-attribution) #### Company - [Home](/) - [What we do](/what-we-do) - [Why us](/why-us) - [Contact](/contact) - [News](/news) - [Roadmap](/roadmap) - [Sitemap](/sitemap) - [llms.txt](/llms.txt) - [Trust & certifications](/trust) #### How we work [ Do it yourself Self-serve with Grower ](/do-it-yourself)[ Do it with you Coaching & expert sprints ](/do-it-with-you)[ Do it for you Done-for-you delivery ](/do-it-for-you)[ Do it with a partner Vetted specialist network ](/do-it-with-a-partner) #### Offerings Tap any card for the dedicated page. Status shown on each. Launch sequence — earliest to latest Live shipping today — buy or book now › Next in build, launching soon › Later scheduled, design stage › On radar validated demand, no date yet [Shape](/shape) Pressure-test the idea - [Is my idea any good?Live ](/offerings/is-my-idea-any-good) - [Bootstrap your runwayLive ](/offerings/bootstrap-your-runway) - [Validate fastLive ](/offerings/validate-fast) - [Size the prizeNext ](/offerings/size-the-prize) - [Competitor intelligenceNext ](/offerings/competitor-intelligence) - [Nail the pitchLive ](/offerings/nail-the-pitch) [Set-up](/set-up) Get the foundations right - [Incorporate & structureLive ](/offerings/incorporate-and-structure) - [Cap table & equityNext ](/offerings/cap-table-and-equity) - [Tax-efficient share schemesOn radar ](/offerings/tax-efficient-share-schemes) - [Claim R&D creditsLive ](/offerings/claim-randd-credits) - [SEIS/EIS advance assuranceLater ](/offerings/seis-eis-advance-assurance) - [Signal EquityNext ](/offerings/signal-equity) [Build](/build) Ship what customers want - [Ship the productLater ](/offerings/ship-the-product) - [Get found onlineNext ](/offerings/get-found-online) - [Win grants & innovation loansLater ](/offerings/win-grants-and-innovation-loans) [Monetise](/monetise) Turn traction into revenue - [Win first customersNext ](/offerings/win-first-customers) - [Pricing & business modelNext ](/offerings/pricing-and-business-model) - [Buyer-ready sales decksNext ](/offerings/buyer-ready-sales-decks) - [Activate IP for partnershipsLive ](/offerings/activate-ip-for-partnerships) - [Win public sector bidsLater ](/offerings/win-public-sector-bids) - [C-suite distribution networkOn radar ](/offerings/c-suite-distribution-network) #### Partner network Advisors & Professionals - [Accountants & advisors](/partners/accountants) - [Lawyers & legal advisors](/partners/lawyers) - [Agencies & consultants](/partners/agencies-and-consultants) - [Independent consultants](/for-consultants) Capital & Community - [Investors, angels & syndicates](/partners/investors) - [Founder communities & networks](/partners/communities) - [Trade associations](/partners/trade-associations) Innovation & Education - [Universities & TTOs](/partners/universities) - [Innovation hubs & incubators](/partners/innovation-hubs) - [Accelerators](/partners/accelerators) - [Tech & integration partners](/partners/tech-and-integration-partners) Workforce Transitions - [Outplacement agencies](/for-outplacement-agencies) - [HR & redundancy teams](/for-employers-redundancy) #### Registered Hypergility Hypergility Ltd & Hypergility Innovations Ltd [help@hypergility.com](mailto:help@hypergility.com) Trading address Science Park Square Brighton BN1 9SB Registered office 66 Paul Street London England EC2A 4NA #### Independently certified [![ISO 9001](/assets/iso-9001-DeXtyob9.svg)ISO 9001 ](/we-are-iso-9001-company-certified "ISO 9001")[![ISO 27001](/assets/iso-27001-BiHzm-R-.svg)ISO 27001 ](/we-are-iso-27001-company-certified "ISO 27001")[![ISO 42001](/assets/iso-42001-WNouqNfX.svg)ISO 42001 ](/we-are-iso-42001-company-certified "ISO 42001")[CE Cyber Essentials ](/we-are-cyber-essentials-certified "Cyber Essentials")[CE+ Cyber Essentials Plus ](/we-are-cyber-essentials-plus-certified "Cyber Essentials Plus") © 2016 - 2026 Hypergility Ltd. All rights reserved. © 2024 - 2026 Hypergility Innovations Ltd. All rights reserved. We use cookies to improve your experience and analyse site traffic. You can manage your preferences or read our [Privacy Policy](/privacy-policy). Accept AllReject Non-EssentialManage Preferences