All EMI schemes must be registered with HM Revenue and Customs and option grants notified by a strict deadline. Failure to notify the options grants by the due date will result in the new EMI options losing their EMI status and associated tax advantages.
EMI Grant Notification 2025/2026 Tax Year
For EMI options granted from 6 April 2024, the deadline for notifying HMRC of the new EMI option grants is 6 July following the end of the tax year in which the options were granted.
Should this notification deadline be missed, consideration may need to be given to cancelling and reissuing new EMI options, although this may require a new valuation (if the company wish to agree a valuation with HMRC), and eligibility may be affected by events occurring since the original grant thus precluding the use of an EMI.
We would always recommend completing the EMI option grant notifications as soon as practically possible after the end of the tax year of grant.
The notification of the EMI option grants is a separate process to the completion of the end of year EMI return, although this notification requirement is planned to be removed from April 2027, and from this date it is anticipated that option grants will be notified within the end of year return.
EMI End of Year Return 2025/2026 Tax Year
Companies have until 6 July following the end of the tax year, to file the end of year EMI return. This is an annual requirement for all EMI schemes even if there are no reportable events during the tax year. Penalties are levied for late submission.
Reportable events include, but are not restricted to, any share options that may have lapsed (for example, employees who may have left the company), option replacements, and option exercises during the tax year.
EMI Valuations
Prior to granting EMI options, whilst not mandatory, we recommend private companies agree a valuation with HMRC to ensure that options are granted within the HMRC EMI qualifying limit, and that the exercise price is set so as not to grant EMI options at a discount thus avoiding a potential income tax charge at the date of exercise or where they are issued at a discount the quantum of this and the associated tax exposure is known.
On a transaction, the buyers Due Diligence Team will often request confirmation that valuation agreement was received from HMRC.
Once approved, the HMRC valuation agreement remains value for 90 days from the date of the valuation agreement.
How we can help
The Menzies Share Schemes Team would be happy to discuss the benefits of an EMI scheme and its implementation, or to assist with any EMI compliance obligations, and our Valuations Team member can assist with any valuations matters, including a share valuation if you are considering an EMI scheme to incentive your employees.
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