HMRC has recently changed the time limit on the reporting for new EMI notifications granted from 6 April 2024. Under the new legislation, the deadline to report the grant of new EMI share options is now 6 July following the end of the tax year in which they were granted.

Therefore, any EMI share options granted between 6 April 2024 and 5 April 2025 must electronically notify to HMRC by 6 July 2025.

This change is welcomed as it provides companies with more time to register the grants with HMRC. However, businesses should not be complacent and ideally should not delay. This is an area that can be scrutinized during due diligence in a sale process, so we would always recommend completing these notifications promptly.

Under the previous rules, companies had 92 days from the date of grant to register/notify newly granted EMI share options. Therefore, any options granted before 6 April 2024 are still within the 92-day time limit.

Missing this deadline means the share options no longer qualify and become unapproved options, resulting in the loss of tax incentives associated with an EMI share option plan. In such a scenario, the share options could potentially be cancelled and reissued, but this would require additional legal costs to draw up the necessary documentation, and a new valuation would need to be agreed with HMRC.

Further details on the valuation timeframes are provided below.

An overview of the overall general time limits for EMI share options:

Valuations

We always recommend private companies undertake a valuation with HMRC, as HMRC could later enquire into the values used as part of a taxable event. Companies have 90 days from the date of the valuation agreement received from HMRC to grant the share options. If the share options are not granted within this timeframe, we recommend a new valuation is sought and agreed with HMRC.

Annual Reporting/EMI 40 Returns

Companies have until 6 July, following the end of the tax year, to file an EMI 40 return form. This is an annual requirement for all EMI schemes and needs to be filed with HMRC, even if there are no reportable events during the tax year. Filing a nil return should be done to avoid a late filing penalty. Reportable events include any share options that may have lapsed (for example, employees who may have left the company) and any options that have been exercised during the tax year. (However, this is not an exhaustive list of reportable events).

Next steps and Getting in touch

To ensure a smooth and efficient process, please do get in touch with our experts. This will allow the necessary paperwork to be put in place and for the new share option scheme to be registered on HMRC’s online system upfront. By doing so, you can avoid missing any deadlines and ensure that your company’s share option plan is set up correctly.

Please get in touch with us via the form below:

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