In Scotland’s tech ecosystem, talent isn’t just important – it’s your competitive edge. But with founders now competing for top people not just locally, but with global hubs like London, the Nordics and beyond, the pressure is on. For CodeBase residents and scaling teams across the country, equity is one of the most powerful tools to attract, retain and motivate the right people – but only if it’s structured properly.
That’s where EMI schemes come in. Done right, they align your team with your growth journey, reward long-term commitment, and help you compete on more than just salary. Done wrong? They can quietly unravel – especially when it matters most, like during a funding round or exit.
At Cooper Parry, we’ve worked with hundreds of high-growth companies to design, implement, and optimise EMI schemes. And we’ve seen the same avoidable mistakes crop up time and time again.
So, whether you’re a CodeBase resident, a scaling founder, or just starting to think about equity incentives, here are six ways EMI schemes can go wrong – and how to make sure yours doesn’t.
1. Promising Options, But Not Granting Them
Telling a key hire they’ll get options “soon” might feel harmless – but delay the grant, and you risk a higher valuation down the line, which means less upside for them and more tax complexity for you. If you’ve made the promise, follow through. Timing matters.
2. Skipping the Valuation
You don’t have to agree a valuation with HMRC – but not doing so is a gamble. Especially if you’re heading toward a funding round or exit. Without it, you risk PAYE and NIC charges eating into proceeds. Get the valuation, disclose everything, and keep it current.
3. Granting Options Below Market Value
It might seem generous to offer options at a discount – but it can trigger income tax and NIC liabilities. Often, this happens because valuations are out of date or incomplete. Avoid the pain later by getting it right upfront – and don’t forget the s431 election.
4. Overengineering Performance Conditions
Tying options to performance is smart – until it isn’t. If targets become unachievable due to market shifts or macro events, you may want to adjust them. But HMRC could treat that as a re-grant, which could kill the tax benefits. Build in flexibility from the start.
5. Triggering Disqualifying Events
From founders not meeting the working time requirement to changes in company control or share terms – there are several ways to accidentally disqualify your EMI scheme. Know the rules, especially if you’re raising or restructuring.
6. Missing the Paperwork
It’s not glamorous, but it’s critical. Miss the 6 July notification deadline or forget the working time declaration, and your scheme could be invalid. Build these checks into your process – and don’t leave it to chance.
Stephen Coleman, CEO & Co-founder, CodeBase:
“Equity is one of the most powerful levers a startup has – but it’s also one of the most misunderstood. We’ve seen too many great teams run into issues because the structure wasn’t right or the paperwork wasn’t watertight. That’s why this kind of practical, founder-first advice from Cooper Parry is so valuable to the CodeBase community. It’s about building strong foundations, avoiding the kind of surprises that can derail a deal, and helping more founders get it right from the start.”
This is the second in a three-part series from CP’s Tech & High Growth team, exploring our partnership with CodeBase and how we’re backing Scotland’s most ambitious founders. Next up: International Expansion.
