If you’ve ever built something from scratch – a product, a company, or even just a pitch that landed – you’ll know how much more invested you feel when you’ve got real skin in the game. It’s a psychological shift. And it’s one that more founders are deliberately engineering into their businesses via share schemes.
The idea’s not new, but the interest is at an all-time high. According to the Government, since 2010, the number of UK businesses using tax-advantaged share schemes has surged by more than 90%. The reason? When done right, shares don’t just motivate people – they transform the way businesses grow.
Let’s unpack why.
Why shares fire up performance (the psychology bit)
It’s simple, really. When people feel like owners, they behave differently.
Whether you’re a startup with your first hires or a growing SME looking to retain talent, giving your team a genuine stake changes their mindset. The focus shifts from short-term KPIs to long-term outcomes. Commitment increases. Collaboration improves. People stay longer and they care more!
Behavioural economists call this ownership bias. It’s the principle that we place more value on things we feel we own. Combine that with a tangible financial upside, and you’ve got a potent formula for performance.
What the data says: shares = serious growth
At Vestd, we’ve worked with thousands of businesses, from bootstrapped startups to scaleups and even multinationals. The consistent theme? Share schemes correlate with higher growth.
And we’re not the only ones who’ve noticed. According to HM Treasury research, companies with tax-advantaged employee share plans report productivity levels over twice as high as companies without them.
It’s not hard to see why: teams with equity think like founders. They spot inefficiencies. They protect margins. They innovate. And they show up – because your success is theirs too.
What are your options?
There’s no one-size-fits-all when it comes to shares. But broadly speaking, UK businesses have four main routes to explore:
1. EMI (Enterprise Management Incentives)
A popular and highly tax-efficient scheme for UK companies with under 250 employees. EMI lets you share with employees, with big benefits like zero income tax on exercise (in most cases) and special CGT treatment when selling.
Best for: Established UK-based startups with employees who qualify, especially in tech, services, or IP-heavy sectors.
2. Unapproved options
These are flexible, simple to issue, and don’t require HMRC approval – but they’re less tax-friendly. Still, they’re a good fit for contractors, advisors, or international team members who wouldn’t qualify for EMI.
Best for: Non-payrolled contributors, global teams, or as a fast, no-fuss way to test equity incentives.
3. Growth shares
This is where things get interesting. Growth shares give recipients a slice of future value, above a certain hurdle. If your company grows beyond that point, the shares gain value. If not, they don’t. Typically, this is set for the point at which the newbie joins the company so if they make an impact on the business, and help to grow the value, they’ll stand to gain from that.
You can also easily set conditions around growth shares, encouraging the recipient to smash their goals. Growth shares can also be issued to a broader range of people – including freelancers, consultants, and even part-time contributors.
Best for: Agile businesses that want to align rewards with results and avoid giving away equity up front.
4. CSOP, SIP & SAYE
These are more common in larger or listed companies. Still worth knowing about, but for most startups and small businesses, EMI or growth shares are the main go-to routes.
Getting started: the practical bit
Equity can feel like a legal and accounting minefield, but it doesn’t have to be. If you’re thinking about setting up a share scheme, here are three tips to get it right:
- Know your goal.
Do you want to retain key hires? Reward external contributors? Tie incentives to milestones? Your objective will shape the structure. - Get expert guidance.
Equity has tax implications and legal complexity. A good accountant or advisor will help you choose the right scheme and structure it properly from day one. - Use digital tools.
Modern sharetech platforms (like Vestd) can help you issue, track, and manage shares without the spreadsheets and paperwork. That means fewer headaches and more transparency for your team.
Final word: equity is the fuel, not the bonus
We tend to think of shares as a perk. But in high-performing businesses, they’re a growth strategy. Equity aligns teams. It attracts top-tier people who want to build, not just earn. And it sends a clear message to your team: you’re not just here to work – you’re here to win.
Whether it’s EMI, growth shares or simple options, the best share schemes don’t just hand out rewards – they build high-trust cultures and fuel lasting success. And really, isn’t that what every founder’s aiming for?
Written by Ifty Nasir, Founder and CEO of Vestd