How UK Startups with Delaware Entities Handle 409A

UK startups that have incorporated a Delaware C-Corporation as a parent holding company for US investment purposes must obtain a 409A valuation under US law before granting stock options through that entity. The 409A applies to the US entity regardless of the fact that the startup operates primarily in the UK. UK EMI schemes and US 409A options serve different purposes and can coexist.

Published August 13, 2026

Updated August 15, 2026

3 min read

Key Takeaways

UK startups with a Delaware C-Corp parent must obtain a 409A valuation before granting US options

The 409A requirement is determined by the US legal entity structure, not the location of the business

UK EMI (Enterprise Management Incentive) options are separate from US Delaware options — both can coexist

EMI options are granted from the UK subsidiary; 409A-covered options are granted from the US parent

UK founders often structure equity so UK employees receive EMI options (tax efficient) and US employees receive Delaware options

A 409A valuation typically takes 5–14 business days and costs $1,099–$3,499 depending on stage

Post-Brexit, UK-US dual structures are increasingly common as UK startups target US market expansion

The UK-Delaware Dual Structure

UK startups that have raised from US VCs, gone through Y Combinator, or are targeting US market expansion often use a dual structure:

Delaware C-Corp (US parent) — issues US stock options to US employees and senior team members, requires 409A valuation
UK Limited Company (operating subsidiary) — handles UK operations, employment, and can issue EMI options to UK employees

This structure allows the startup to optimise equity compensation for both US and UK employees using the most tax-efficient instrument for each jurisdiction.

EMI Schemes vs US Options: Key Differences

	UK EMI Options	US Delaware Options (409A)
Governing law	HMRC / UK tax law	IRC Section 409A (US federal)
Granted by	UK Limited Company	Delaware C-Corp
Valuation required	HMRC pre-approval (AMV agreement)	Independent 409A appraisal
Tax benefit	CGT rate (10% with ER) on disposal	ISO: long-term CGT if held 2yr; NSO: ordinary income at exercise
Employee limit	£250,000 per employee	No per-employee limit for NSOs
Company limit	£3 million total EMI options	No limit

When UK Startups Need a 409A?

A UK startup needs a 409A valuation when:

They have incorporated a Delaware C-Corp (as parent or subsidiary)
They plan to grant stock options from that Delaware entity
The option recipients are subject to US tax law (US employees, US-based contractors)

If the startup has only a UK entity and only UK-based employees receiving EMI options, they do not need a 409A — but they do need an HMRC Actual Market Value (AMV) agreement for EMI purposes.

Post-Brexit Considerations

Post-Brexit, UK startups are increasingly targeting US expansion earlier in their lifecycle. The UK's relatively startup-friendly environment (R&D tax credits, SEIS/EIS schemes, EMI options) combined with a Delaware C-Corp for US investor access is now a common and well-understood structure.

UK startups going through this transition typically need their first 409A when they incorporate the Delaware entity and before they issue their first US option grants — often at the time of a Series A round from a US lead investor.