What are the ongoing compliance requirements after granting an EMI option?
There are ongoing reporting requirements following the grant of an EMI scheme to avoid invalidating the tax-advantages.
12 December 2022
Technology, Media and Telecommunications
Our dedicated Technology team can support your business locally, nationally, and internationally.
You’ve done the hard work. You’ve jumped through HMRC’s numerous hoops, met all the qualifying conditions and have successfully implemented a new EMI scheme to reward and incentivise your key employees.
But, there are still ongoing reporting requirements following the date of grant, otherwise you risk invalidating your tax-advantaged EMI scheme.
Employee Option Agreements
Employee option holders must sign, date, and return a copy of their Option Agreement within 7 days of grant to the company.
Scheme registration with HMRC and notification
If this is a new share scheme, you must first register the scheme on HMRC’s online portal.
Once registered, you will be able to make an in-year notification to submit the details of the EMI share options and employee option holders.
The EMI notification must be completed within 92 days of grant. The deadline is strictly enforced by HMRC, with very few reasonable excuses. If it is not completed, it will not be a qualifying EMI share option scheme and will not be able to benefit from the tax advantages.
Annual ERS returns
Once an EMI scheme has been registered with HMRC, you are required to make an end of year annual return. The company is obliged to disclose any options that have been adjusted, replaced, released, lapsed, cancelled, or exercised in the preceding tax year.
Even if no reportable transactions have occurred, you are still required to submit a nil return. Failure to submit an annual return by 6 July following the tax year end will result in late filing penalties.
Looking for help?
Don’t hesitate to contact a member of our tax team or your usual Bishop Fleming contact if you are looking for assistance with fulfilling your compliance obligations.
EMI share options
See also our other articles on EMI share option schemes:
