--- title: "Explore your options: why share options could work better than a cash bonus" id: "2957" type: "post" slug: "gift-emi-options-to-your-team" published_at: "2019-12-09T10:50:43+00:00" modified_at: "2024-12-07T17:12:00+00:00" url: "https://seedlegals.com/resources/gift-emi-options-to-your-team/" markdown_url: "https://seedlegals.com/resources/gift-emi-options-to-your-team.md" excerpt: "Do share options make a better bonus than cash? Find out why an option scheme could be a better long-term and cash-smart way to reward and incentivise your team - both for you and your employees." taxonomy_category: - "Option Schemes" --- 4 min read Expert reviewed This article has been fact-checked by a SeedLegals subject matter expert. [Meet our experts](https://seedlegals.com/authors-and-experts/) and learn more about our review process and quality assurance in our [editorial policy](https://seedlegals.com/editorial-policy/) . # Explore your options: why share options could work better than a cash bonus Published: Dec 9, 2019 Updated: Dec 07, 2024 Contents [Share option schemes are increasingly popular in the UK](#share-option-schemes-are-increasingly-popular-in-the-uk) [Equity empowers employees Options are a more tangible, long-term way to reward value](#equity-empowers-employeesoptions-are-a-more-tangible-long-term-way-to-reward-value) [Preserve your cashflow Pay once to set up your scheme, reward multiple employees](#preserve-your-cashflowpay-once-to-set-up-your-scheme-reward-multiple-employees) [So, how much do options cost?](#so-how-much-do-options-cost) [Watch the video](#watch-the-video) [Next steps: talk to the options experts](#next-steps-talk-to-the-options-experts) [Writer Kirsty MacSween Senior Copywriter](https://seedlegals.com/resources/author/kirsty/) [Expert contributor Mo Saed Head of Investor Sales](https://seedlegals.com/resources/author/mo/) Before you start any conversations about cash bonuses, consider whether share options could be a better long-term and cash-smart way to reward and incentivise your team – both for you and your employees. In this post, we explore why so many businesses are choosing to use option schemes as a win-win alternative to cash bonuses. ##### Unlimited options ### Keep your options open as you scale UK employees, international team members, consultants, advisors … whoever’s on your team, we make it simple to manage your employee equity. All for one low flat fee of £2,699 a year. [Make options easy](https://seedlegals.com/grow/share-options-scheme/) ## Share option schemes are increasingly popular in the UK The number of UK companies that are giving equity to their employees has dramatically increased over the last ten years. The most recent [statistics from HMRC](https://www.gov.uk/government/statistics/employee-share-scheme-statistics/employee-share-schemes-statistics-commentary) show that over 16,000 companies ran ‘tax-advantaged’ (ie, HMRC-approved) share schemes in the 2021 tax year. That was up 6% from the previous year and a whopping 88% from 2010. By far, the most popular way for small companies to give equity to their team is through the [EMI share option scheme](https://seedlegals.com/resources/what-is-an-emi-scheme/) . That’s because it’s the most tax-efficient way to reward your team with equity, both for your team members and for your company. **Not eligible for EMI?** Not every company or every team member [qualifies for EMI](https://seedlegals.com/resources/company-qualifies-emi-share-option-scheme/) . Not a problem - [Unapproved option schemes](https://seedlegals.com/resources/unapproved-share-options/) are a more flexible way to reward your team with equity. ## Equity empowers employees Options are a more tangible, long-term way to reward value A cash bonus is an excellent incentive and/or reward – no doubt about that. But, once given, it’s gone. With share options, your employee gets the promise of a literal stake in the business they’re helping to build. **Why granting share options is often better than granting shares** - Your employee doesn’t get taxed on the grant - You protect your current shareholders by deferring the actual share grant - Extra tax benefits for your employee and your company under the EMI scheme Read more: [Shares vs share options](https://seedlegals.com/resources/shares-vs-options-whats-the-difference/) When someone owns even a small piece of equity in a business, their relationship with that business changes: they bring more to the table, emotionally, psychologically and demonstrate enhanced commitment – a commitment far beyond what money can achieve. Unlike cold hard cash, share options help keep your team aligned. As a future shareholder in the company, they’ll know that building the company’s valuation is just as much in their interests as it is yours. And when they come to exercise their options and sell their shares, those options will (hopefully) pay out many times over what they’d receive as a cash bonus today. With SeedLegals, your team has access to their own options portal, complete with a handy calculator that shows what their options are worth. When they put in hypothetical valuations, they can see how much their options could be worth in the future. It's a great tool to keep your employees invested in continuing to build your company's valuation. As you think about the best way to reward and motivate your team’s hard work, it’s worth considering whether options could be a more tangible and ultimately more lucrative way to show how you value their contribution. ## Preserve your cashflow Pay once to set up your scheme, reward multiple employees Now that we’ve covered why share options can often be a better deal for the team, let’s explore why it makes sense for the business. Beyond the supercharged employee motivation and retention benefits, giving options as a performance bonus helps you manage your cash flow. Instead of parcelling out lump sums that *take much-needed cash out* of the business, you can *invest in your business and your team* by setting up an option scheme. > Offering options is crucial for aligning everyone in the company with our common mission and goals. It’s an effective strategy to attract and retain top talent. At SeedLegals, all team members are option holders and it’s now the norm for all startup and scale-ups. > > Although the valuation approval may take 4-6 weeks, you are still able to set the scheme rules up and send out draft agreements before the EOY. > > [Mo Saed](https://www.linkedin.com/in/mo-s-9b7153128/) > Share options expert, > > [SeedLegals](https://seedlegals.com/) ## So, how much do options cost? To set up an options scheme on SeedLegals, you need an Options Subscription. The subscription costs £2,699 per year. This includes: ✅Unlimited EMI share option schemes for UK-based, PAYE employees ✅Unlimited EMI valuations to get the best possible price for your team ✅Unlimited Unapproved option schemes for advisers, contractors and anyone based outside the UK ✅All the legal documents you need to ratify your scheme (including board and shareholder resolutions, option agreements and SH01s) ✅Option holder dashboard for your team to view and manage their options Compare this combined cost to the tens of thousands you’d award in year-end bonuses, and you’ll see why we think options as a bonus is a no-brainer. ## Watch the video For more insights on how to use options to motivate your team, catch up with this webinar, hosted by equity expert Hugo Hiley. Can’t watch the video? Click below for the auto-generated transcript. - Read the transcript **More options resources** - [How to give shares and share options](https://seedlegals.com/resources/how-to-give-shares-in-a-startup/) - [For employees: options explained](https://seedlegals.com/resources/employee-share-options-explained/) - [Before or after funding? When to set up an EMI option scheme](https://seedlegals.com/resources/when-is-the-right-time-to-put-an-emi-scheme-in-place/) - [How long does it take to set up an option scheme?](https://seedlegals.com/resources/how-long-to-set-up-emi-scheme/) ## Next steps: talk to the options experts Ready to get started? Or need to get some questions answered first? Book a free call with our team of experts. - Sources [Employee Share Scheme Statistics | HMRC](https://www.gov.uk/government/statistics/employee-share-scheme-statistics/employee-share-schemes-statistics-commentary) – accessed 20/11/2023 From our experts to your inbox Sign up for upcoming events, new ebooks, templates and more. ## Related posts [9 min read Shares vs options: what’s the difference? The important difference is that if someone owns shares, they are a shareholder immediately. With options, they have own... Anthony Rose](https://seedlegals.com/resources/shares-vs-options-whats-the-difference/) [6 min read EMI or Unapproved Share Option Scheme – which is best? Tax advantaged EMI scheme, or a more flexible Unapproved scheme? We explain the differences and how to decide which is r... Tommy Hackley](https://seedlegals.com/resources/emi-or-unapproved-share-option-scheme-which-is-best-for-you/) [2 min read Giving your team shares: How to size an employee option pool In the UK, 10% is the median amount of equity assigned to EMI share option pools. According to Index Ventures in the US,... Anthony Rose](https://seedlegals.com/resources/giving-your-team-shares-how-to-size-an-employee-option-pool/)