Share Schemes Guide UK 2026 — SAYE, SIP, EMI & Company Shares

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

1. SAYE is risk-free — can take cash if shares fall
2. SIP: hold 5 years — completely tax-free
3. EMI offers 10% CGT — huge advantage for small company employees
4. CSOP avoids income tax — CGT only on sale
5. Unapproved = income tax — but company gets deduction
6. Don’t over-concentrate — diversify eventually

For related content, see our capital gains tax calculator, salary sacrifice calculator, and tax-efficient investing.