The latest EMI changes and where we are now with other UK tax favoured plans.
The government has confirmed that legislation will be introduced in the Autumn Finance Bill 2023 to ease a requirement for enterprise management incentives (EMI), by extending the timing for notifying the grant of EMI options.
This is part of a package of measures announced at Spring Budget 2023, which aim to simplify the grant process for EMI options, as part of a wider review of all four HMRC tax advantaged plans.
Currently, EMI options must be notified to HMRC within 92 days of grant (ITEPA 2003 Sch 5 para 44(1)). However, for options granted on or after 6 April 2024, the grant notification deadline will be 6 July following the tax year in which the option was granted. So the first options granted after the change comes into effect will need to be notified to HMRC by 6 July 2025.
There will also be a consequential change to the latest date for HMRC to give notice of enquiry into an EMI option, which is currently 12 months from the end of the 92 day notification period (ITEPA 2003 Sch 5 para 46(5)). The 12 month enquiry period will instead run from the new 6 July notification deadline. A notice of enquiry may still be given at any time if HMRC subsequently discovers that information relating to a notification was materially false or misleading.
The extension to the notification deadline will clearly be of benefit to companies operating EMI plans and their employee option holders, reducing the number of late notifications and any resulting loss of tax favourable treatment.
However, the practical impact of this may need to be addressed in HMRC guidance, including the likely increase in options being exercised before they are notified and any changes to the current process for making reasonable excuse claims for late notifications.
These are the last of the measures to be implemented as part of the government’s review of EMI, following the changes from 6 April 2023 under F(No.2)A 2023, namely the removal of requirements to set out details of share restrictions in option agreements and to sign working time declarations (although the working time requirement itself was not removed).
Changes for the company share option plan (CSOP) also took effect in April 2023, to double the individual CSOP limit and relax previous share class restrictions, widening access to CSOP. The remaining two tax advantaged plans are subject to ongoing review: share incentive plan (SIP) and save as you earn (SAYE). The call for evidence for these all-employee plans closed on 25 August 2023, with improvements and simplifications eagerly anticipated.
Home >Articles > Autumn Statement 2023: EMI measures
Autumn Statement 2023: EMI measures
The latest EMI changes and where we are now with other UK tax favoured plans.
The government has confirmed that legislation will be introduced in the Autumn Finance Bill 2023 to ease a requirement for enterprise management incentives (EMI), by extending the timing for notifying the grant of EMI options.
This is part of a package of measures announced at Spring Budget 2023, which aim to simplify the grant process for EMI options, as part of a wider review of all four HMRC tax advantaged plans.
Currently, EMI options must be notified to HMRC within 92 days of grant (ITEPA 2003 Sch 5 para 44(1)). However, for options granted on or after 6 April 2024, the grant notification deadline will be 6 July following the tax year in which the option was granted. So the first options granted after the change comes into effect will need to be notified to HMRC by 6 July 2025.
There will also be a consequential change to the latest date for HMRC to give notice of enquiry into an EMI option, which is currently 12 months from the end of the 92 day notification period (ITEPA 2003 Sch 5 para 46(5)). The 12 month enquiry period will instead run from the new 6 July notification deadline. A notice of enquiry may still be given at any time if HMRC subsequently discovers that information relating to a notification was materially false or misleading.
The extension to the notification deadline will clearly be of benefit to companies operating EMI plans and their employee option holders, reducing the number of late notifications and any resulting loss of tax favourable treatment.
However, the practical impact of this may need to be addressed in HMRC guidance, including the likely increase in options being exercised before they are notified and any changes to the current process for making reasonable excuse claims for late notifications.
These are the last of the measures to be implemented as part of the government’s review of EMI, following the changes from 6 April 2023 under F(No.2)A 2023, namely the removal of requirements to set out details of share restrictions in option agreements and to sign working time declarations (although the working time requirement itself was not removed).
Changes for the company share option plan (CSOP) also took effect in April 2023, to double the individual CSOP limit and relax previous share class restrictions, widening access to CSOP. The remaining two tax advantaged plans are subject to ongoing review: share incentive plan (SIP) and save as you earn (SAYE). The call for evidence for these all-employee plans closed on 25 August 2023, with improvements and simplifications eagerly anticipated.
