Option pools: the percentage that changes the investment maths

Agree what the percentage measures

Clarify whether the pool is calculated before or after investment and on what fully diluted basis. Ask whether existing granted options count within the pool and how unallocated capacity is treated. The same headline percentage can produce different founder dilution depending on the calculation.

Example: An investor requests that a new pool be created before its investment. Existing holders may bear the resulting dilution before the investor receives its shares. A post-investment pool can distribute that dilution differently. Use an explicit cap-table model and ensure the documents implement the model everyone approved.

Separate commercial design from tax qualification

Set eligibility, vesting, exercise price, exercise events, leaver rules and treatment on a sale. Then assess whether EMI or another arrangement is appropriate. HMRC changed important EMI limits from 6 April 2026, so a template repeating old thresholds may be out of date.

Current HMRC guidance describes expanded eligibility for many companies, while detailed conditions, excluded activities and special cases remain relevant. Do not promise tax-free treatment based only on company size. Employee working-time requirements, valuation, grant terms, notifications and later events can affect the result.

Make the grant process reliable

Obtain the necessary corporate approvals and create clear individual option agreements. Explain that an option is a right to acquire shares on specified terms, not necessarily immediate ownership. Employees should understand exercise cost, possible tax and what happens if they leave before an exit.

Maintain grant dates, valuations, vesting records and reporting deadlines. Review the effect of company changes, altered employment and cross-border moves. A cap-table tool can help administration but cannot establish eligibility or fix an invalid grant. Seek specific tax advice before making promises in offer letters or presenting illustrative values as guaranteed outcomes.

Your next steps

1. Model the pool before and after investment on an agreed fully diluted basis.
2. Check the current scheme conditions and individual eligibility before grant.
3. Document approvals, option terms, valuation and reporting responsibilities.