A share option is an agreement that gives someone the legal right to buy a company's shares in the future, but at a price that is fixed today.
If the value of the business is set to increase notably the option holders could make a significant profit when they sell their shares.
If you provide share options to your employees then they do not have to pay the income tax that would normally be charged on the market value of any shares or options granted to them.
Also, if employees are given options under an approved EMI, they could potentially pay capital gains tax at 10% on the increase in value over what they pay for the shares (the option's 'exercise price').
You can claim relief via your tax return, and you will need a S/EIS3 or S/EIS company (or fund manager). You should receive this after your money has been invested, your shares allotted, and the S/EIS company receives confirmation from HMRC it has satisfied all the requirements.