Share option pools in the UK: how big should one be and when do you set it up?

I was reading about share option pools the other day and wanted to check I have understood it properly, because most of what I find is either a US-style guide that assumes different tax rules or an article from an adviser promoting their own services. Here is what I have pieced together, and I would appreciate anyone correcting me.

A share option pool seems to be a block of shares set aside for future employees, advisers and sometimes later hires, so the company can offer equity without issuing new shares each time. Options give the holder the right to buy shares at a fixed price, known as the exercise price, usually after a vesting period and sometimes only on an exit. The pool is typically created before a funding round, and investors often expect it to be in place and sized to cover planned hires over the next 18 to 24 months. I keep seeing figures of around 10% to 15% at seed stage, though I am unsure how that changes by sector or by how many senior hires are planned.

The UK side is where I get confused. Many companies use EMI options, which can be tax-efficient for employees if the company and the individual meet the conditions, such as the gross asset limit, the number of employees, the working time requirement and the exercise price being set at market value. Anyone who does not qualify, such as advisers, non-executive directors or contractors, seems to need unapproved options or another structure like growth shares. I also keep seeing that the market value of the shares has to be agreed with HMRC through a valuation, and that missing the filing deadline after granting options can cause problems. Another point I am unsure about is whether the pool counts before or after the new money in a round, since that changes how much dilution founders actually take.

My question is how founders decide how big the pool should be and who gets what, whether by role, seniority or a standard table. I would also like to know how people handle vesting, cliffs and leaver terms, what happened when the pool ran out sooner than expected, and whether investors pushed for a larger pool during negotiations. I have read something similar to this on Entrepreneur Plus, so I would like to hear from anyone who has set one up, how the size and valuation were decided, and whether it caused any friction with HMRC or during a later raise. 2026-10-28 17:12 

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