Good News for Companies Registering EMI Share Options

A recent amendment to Schedule 5 of the Income Tax (Earnings and Pensions) Act 2003 by section 13 of the Act has extended the deadline for the registration of Enterprise Management Incentive (EMI) share options with HMRC. EMI options granted on or after 6 April 2024 will now be required to be registered with HMRC on or before 6 July following the end of the tax year in which the EMI options are granted to the employees, instead of being required to be registered within 92 days of grant.
For example, the deadline for the registration of EMI options granted anytime from 6 April 2024 to 5 April 2025 with HMRC will be 6 July 2025. Any EMI options granted prior to 6 April 2024 will still require registration with HMRC within 92 days of the date of the grant.

The change provides clarity for companies registering EMI options and is a much more lenient approach by HMRC which will enable employers more time to comply with their requirements to enable employees to benefit from the tax advantages of an EMI option. It will also allow more flexibility for companies to grant options to employees in tranches within the 90 day period from receipt of an HMRC valuation while retaining the same registration date (provided that the grant dates are within the same tax year).

Notification to HMRC of the grant of EMI options must be done by the employer company through their ERS online filing system (which can be completed by any company in the EMI company’s group with an active PAYE reference) and cannot be done by an agent of the company. Companies can register for ERS online as an add-on to their PAYE online services. An activation code will be posted to the company address which HMRC has on file for the company’s PAYE services. Once the company is registered for ERS online, the EMI scheme under which the options were granted can be registered by providing the company’s corporation tax reference, company registration number and the type of scheme. It will then
take up to seven days for approval of the registration by HMRC following which the scheme will be allocated a unique scheme reference number.

It is important that the company factors in the time for receipt of the activation code as well as the seven-day HMRC timeframe for approval to ensure that the scheme is registered within the time limit. HMRC will not provide confirmation that registration was completed within the statutory time limit. It is imperative that EMI options are registered correctly and within the time limit in order for the employees to benefit from the tax advantages of their EMI option. The company will also be required to file an annual return with HMRC once the scheme is registered as failure to do so will result in a non-filing penalty.
HMRC has also recently updated their guidance relating to any documents filed with ERS online. Importantly, the company must save copies of all documents before filing as HMRC will not retain the documents and the information will not be accessible after filing.

Further information on the registration of EMI schemes and other employment-related securities can be found at https://www.gov.uk/guidance/tell-hmrc-about-your-employment-related-securities.