Employee Benefits & Tax UK 2026/27 — BIK, P11D and Salary SacrificeShare Schemes Guide UK 2026 — SAYE, SIP, EMI & Company Shares
Complete guide to employee share schemes. SAYE, Share Incentive Plans, EMI options — understand the tax benefits and how each works.
Employee share schemes offer significant tax advantages when done through HMRC-approved structures. Here’s how each works.
Types of Share Schemes
Overview Comparison
| Scheme | Who Offers | Tax Benefit | Risk |
|---|
| SAYE | Listed companies | No income tax, CGT on sale | None (can just take savings) |
| SIP | Any company | Tax-free if 5 years | Share price fall |
| EMI | Small companies (<£30m) | 10% CGT possible | Share value |
| CSOP | Any company | CGT only (no income tax) | Share value |
| Unapproved options | Any | Income tax + NI on exercise | Share value + tax due |
Save As You Earn (SAYE)
How It Works
| Stage | What Happens |
|---|
| Invitation | Company offers SAYE scheme |
| Option price set | Up to 20% below current price |
| Save monthly | £5-500/month for 3 or 5 years |
| At end | Choose: buy shares at option price OR take cash |
| If shares rose | Big gain (discount + growth) |
| If shares fell | Just take your savings |
SAYE Tax Treatment
| Event | Tax |
|---|
| Monthly savings | From net pay (after tax) |
| Exercise option | No income tax or NI |
| Sell shares immediately | CGT on gain above option price |
| Transfer to ISA | CGT-free if done within 90 days |
SAYE Example
| Timeline | Amount |
|---|
| Option price | £8 (20% discount from £10) |
| Monthly savings | £200 |
| Savings period | 5 years |
| Total saved | £12,000 |
| Shares you can buy | 1,500 (£12,000 ÷ £8) |
| Share price at end | £15 |
| Value of shares | £22,500 |
| Profit | £10,500 |
| Transfer to ISA | No CGT on future gains |
Why SAYE Is Low Risk
| Outcome | You Get |
|---|
| Share price rises | Discount + growth = big gain |
| Share price flat | Just the 20% discount |
| Share price falls (but above option) | Still a gain |
| Share price falls below option | Take your cash savings |
You can NEVER lose money with SAYE — worst case is you get your savings back.
Share Incentive Plan (SIP)
Types of SIP Shares
| Type | How You Get Them | Limit |
|---|
| Free Shares | Company gives you | Up to £3,600/year |
| Partnership Shares | Buy from pre-tax salary | Up to £1,800/year |
| Matching Shares | Company matches partnership | Up to 2:1 ratio |
| Dividend Shares | Reinvest dividends | Up to £1,800/year |
SIP Tax Rules
| When Sold | Tax Treatment |
|---|
| Under 3 years | Income tax on full value OR gain |
| 3-5 years | Income tax on value when awarded |
| 5+ years | Completely tax-free |
SIP Tax Example
Free Shares worth £3,000 awarded
| Sell After | Share Value Now | Income Tax | CGT | Total Tax |
|---|
| 2 years | £4,000 | £800-1,600 | £0 | £800-1,600 |
| 4 years | £4,000 | £600-1,200 | £0-200 | £600-1,400 |
| 5+ years | £4,000 | £0 | £0 | £0 |
Partnership Shares:
| Your Contribution | Salary Sacrifice | Tax Saved | Effective Cost |
|---|
| £1,800/year | From gross | £360-810 | £990-1,440 |
SIP Strategy
| Action | Why |
|---|
| Maximise free shares | 100% free |
| Buy partnership if offered | Pre-tax purchase |
| Hold 5 years | Tax-free |
| Diversify eventually | Don’t over-concentrate |
Enterprise Management Incentives (EMI)
What Is EMI?
| Feature | Detail |
|---|
| For | Employees of small companies |
| Company limit | Assets under £30m |
| Per-employee limit | Options over shares worth up to £250,000 |
| Total scheme limit | £3m in options outstanding |
EMI Tax Treatment
| Event | Tax |
|---|
| Grant of options | No tax |
| Exercise of options | Usually no tax (if at market value) |
| Sale of shares | CGT (potentially 10% with BADR) |
Business Asset Disposal Relief (BADR)
| If You Qualify | CGT Rate |
|---|
| EMI options exercised | 10% (instead of 20%) |
| Held 2+ years | Required |
| Lifetime limit | £1m gains |
EMI Example
| Stage | Value |
|---|
| Options granted | 10,000 shares at £5 = £50,000 |
| Exercise price | £5 |
| Company sold for | £50/share |
| Your proceeds | £500,000 |
| Your cost | £50,000 |
| Gain | £450,000 |
| CGT at 10% (BADR) | £45,000 |
| You keep | £455,000 |
Without EMI scheme, typical employee would pay income tax (~£180,000) plus NI.
Company Share Option Plan (CSOP)
How CSOP Works
| Feature | Detail |
|---|
| Option limit | £60,000 worth of shares |
| Exercise period | 3-10 years from grant |
| Option price | At least market value at grant |
CSOP Tax
| Event | Tax |
|---|
| Grant | None |
| Exercise (after 3 years) | None |
| Sale | CGT on gain above exercise price |
CSOP vs Unapproved Options
| Feature | CSOP | Unapproved |
|---|
| Income tax on exercise | No | Yes |
| NI on exercise | No | Yes |
| CGT on sale | Yes | Yes (on further gain) |
| Company tax deduction | No | Yes |
Unapproved Share Options
When Used
| Situation | Why Unapproved |
|---|
| Above CSOP limits | £60k max in CSOP |
| Non-UK company | May not qualify |
| Flexible terms | Less restrictions |
| Company wants tax deduction | Gets CT relief |
Tax Treatment
| Event | Tax |
|---|
| Grant | Usually none (unless sold immediately) |
| Exercise | Income tax + NI on the “spread” |
| Sale | CGT on gain after exercise |
Example: Unapproved Option
| Detail | Amount |
|---|
| Option price | £1 |
| Market value at exercise | £10 |
| “Spread” | £9 |
| Number of options | 10,000 |
| Income tax (40%) + NI (2%) | £37,800 |
| You need to pay | £37,800 + £10,000 exercise |
| Shares received | Worth £100,000 |
Challenge: You need cash to pay the tax, often sell some shares (“sell to cover”).
Growth Shares
What Are Growth Shares?
| Concept | Detail |
|---|
| “Hurdle” value set | Shares only valuable above hurdle |
| Low initial value | So low tax on acquisition |
| Growth taxed as CGT | More tax-efficient than income |
Example
| Timeline | Value |
|---|
| Company value | £10m |
| Your hurdle | £10m |
| Value of your shares at start | ~£0 |
| Income tax on acquisition | Minimal |
| Company sold for | £50m |
| Your shares now worth | £4m (if 10% stake) |
| Tax on £4m | CGT at 20% = £800k |
Restricted Stock Units (RSUs)
Common in US Tech Companies
| How They Work | Detail |
|---|
| Promise of shares | At future date |
| Vesting period | Usually 3-4 years |
| Value at vest | Taxed as income |
| UK employees | Full income tax + NI |
RSU Tax (UK Employee)
| Event | Tax |
|---|
| Grant | None |
| Vesting | Income tax + NI on value |
| Sale | CGT on gain after vest |
Strategy Considerations
General Principles
| Principle | Why |
|---|
| Don’t over-concentrate | Company fails = job lost + wealth lost |
| Diversify over time | Sell and spread risk |
| Use ISA allowance | Transfer SAYE shares |
| Understand vesting | Plan around dates |
| Consider tax years | Time sales carefully |
Concentration Risk
| Your Situation | Risk Level | Action |
|---|
| <10% of wealth in employer | Low | Continue accumulating |
| 10-25% | Medium | Consider diversifying new gains |
| 25-50% | High | Actively diversify |
| >50% | Very high | Reduce significantly |
Key Takeaways
- SAYE is risk-free — can take cash if shares fall
- SIP: hold 5 years — completely tax-free
- EMI offers 10% CGT — huge advantage for small company employees
- CSOP avoids income tax — CGT only on sale
- Unapproved = income tax — but company gets deduction
- Don’t over-concentrate — diversify eventually
For related content, see our capital gains tax calculator, salary sacrifice calculator, and tax-efficient investing.