Scaling SaaS videos: share options for SaaS scale ups
For UK technology businesses, particularly SaaS and software scale‑ups, navigating slower funding markets, heightened global competition for talent and increasing investor scrutiny, retaining key people has become a board‑level issue. With salary costs under pressure and hiring risks rising as businesses scale post‑Series A, equity incentives are no longer a perk, they’re a critical tool for aligning teams around growth, resilience and exit value.
In this short video, Thomas Dalby, Tax and Legal Partner at Moore Kingston Smith, outlines how SaaS CFOs are using employee share schemes to compete for talent while preserving cash. He covers the changes to the EMI scheme and explores alternative equity structures for scaling SaaS businesses that don’t qualify, helping founders and finance leaders reward, retain and motivate teams at every stage of growth.
Key takeaways from the video for SaaS CFOs
- EMI remains the most effective share incentive for qualifying SaaS businesses, with recent changes to the scheme meaning more businesses now qualify.
- Eligibility should be actively reviewed – especially as business models evolve.
- Overseas hires require bespoke consideration.
- Growth shares and hybrid structures can be powerful alternatives.
- Scheme design is only half the equation – clear communication is critical.
Below we highlight the key points CFOs should be considering now.
Why employee share incentives matter for SaaS scale‑ups
SaaS businesses are people‑led, value‑driven and often built for future exits. Share incentives can:
- Align senior management and key hires with long‑term growth objectives.
- Support retention in a competitive hiring market.
- Drive EBITDA growth and exit readiness.
- Manage cash flow more effectively than cash bonuses.
For many SaaS CFOs, the challenge is how to offer equity in a tax‑efficient, compliant and commercially aligned way.
EMI remains the gold standard and is now more accessible
For eligible UK businesses, EMI options remain the most tax‑advantaged share scheme available.
From 6 April 2026, significant changes to the EMI regime made it accessible to more businesses, including:
- Higher gross asset and headcount limits, allowing larger businesses to qualify – an increase from 250 to 500 employees and gross assets from £30 million to £120 million.
- An increase in the company‑wide EMI option limit to £6 million – an increase from £3 million.
- Option lifespans extending to fifteen years (increased from ten years), with the ability to amend existing options to take advantage of the longer window.
If a SaaS business qualifies for EMI, there needs to be a compelling commercial reason not to use it. The cost differential is material. In simple terms, it can cost an employer 91p to deliver £1 of value to an employee under EMI, compared with £1.63 via a cash bonus or non‑qualifying option.
Qualifying trade traps that can catch SaaS businesses out
While many SaaS businesses assume they automatically qualify for EMI, this is not always the case.
Common risk areas include:
- Business models reliant on royalties or licence fees.
- Hardware‑plus‑software offerings structured in a way that resembles equipment hire.
- Changes to product mix or revenue streams over time.
These issues can inadvertently push a business outside the EMI qualifying trade rules. CFOs should ensure qualifying status is reviewed before options are granted, not rely on historic assumptions.
Overseas hires: proceed with care
As SaaS businesses scale, hiring overseas talent often becomes unavoidable. However, equity incentives for non‑UK employees are complex and vary significantly by jurisdiction.
In particular, the US has onerous compliance requirements that can make share options costly and administratively difficult if structured incorrectly. CFOs should treat overseas option grants as a separate workstream and seek advice before issuing equity to international hires.
When EMI isn’t available: alternative equity structures
Not all SaaS businesses can use EMI but that doesn’t mean equity incentives are off the table.
In the video, Thomas discusses real‑world examples where growth share structures were used to deliver meaningful incentives when EMI was not suitable.
Typical scenarios include:
- Ownership structures that prevent EMI qualification.
- Businesses with higher valuations where upfront tax costs would be prohibitive.
- Founder‑led businesses looking to introduce ‘golden handcuffs’ for key managers.
Growth shares can be designed to:
- Ring‑fence existing value for shareholders.
- Reward management only for future growth.
- Carry low upfront tax cost.
- Link reward directly to exit outcomes.
When combined with careful scheme rules and communication, these structures can reduce employee churn, strengthen management focus and materially improve exit outcomes.
Reviewing existing schemes: a timely opportunity
For CFOs who already have share schemes in place, now is an ideal time to review whether:
- Existing EMI options should be amended to take advantage of the new 15‑year lifespan.
- The recent EMI changes mean the business now qualifies when it previously didn’t.
- Schemes still comply with updated HMRC guidance.
- Historic features could now trigger unapproved option treatment.
Recent HMRC commentary has highlighted that certain EMI features, once widely used, may now create tax risk if left unchecked.
How Moore Kingston Smith can help
At Moore Kingston Smith, we work closely with technology CFOs to design, implement and operate equity incentive plans that support growth, retention and future exits, while remaining commercially practical and HMRC‑compliant.
If you’re scaling your SaaS business, hiring internationally or reviewing your exit strategy, now is the time to assess whether your share incentives still work as hard as your management team does.
Get in touch for more information.
