It didn’t make it into the speech, but it was in the small print, for those with eagle-eyes only – it was announced as part of the 2023 Spring Budget that, from 6 April 2023, some simplifications will be introduced to the process of granting EMI options.
The requirements for the company to declare that an EMI optionholder has signed a working time declaration, and to detail any restrictions on the option shares in the option agreement, as conditions for qualifying EMI treatment are expected to fall away.
And, from 6 April next year, the deadline to notify new EMI option grants to HMRC (currently 92 days from grant) is expected to be extended. The new deadline will be 6 July following the end of the tax year in which the option was granted, and so the timing will become aligned with the annual share plan return deadline for the relevant tax year.
It’s common in particular for companies with older template EMI option agreements, or companies with evolving articles, to fall short of HMRC’s current requirements around the working time declaration and notifying the optionholder of share restrictions, and so these changes are helpful.
However it’s currently unclear as to whether the ability to notify HMRC of the grant of EMI options straight away will remain – or whether the grant notification process will be integrated with the annual return, which can be submitted only once the end of the tax year has been reached.
Companies granting EMI options will, in any case, still need to mindful to carry out the notification in good time before the deadline. Companies granting EMI options for the first time in particular need to ensure that they leave enough time before the grant notification deadline to set up an EMI option scheme registration with HMRC first. This pre-step (something that only the company can complete, and not any agent) can take up to two weeks to complete, and that’s provided the company already has access to the relevant area of HMRC’s Government Gateway – which companies using external accountants or other agents for payroll/tax services may not already have.
A summary of other key tax announcements from the 2023 Spring Budget can be found here.