EMI deadlines you don't want to miss

Last updated: 30 April 2024.

So, after much deliberation, you've decided that Enterprise Management Incentives are for you. Well, you're in good company - over 14,000 UK-based businesses have launched an EMI scheme.

If you don't know what I'm talking about, I'll catch you up.

An initiative of HMRC, EMI is designed to empower UK businesses, allowing them to offer share options to their employees in the most tax-efficient way possible.

But along with strict eligibility criteria, there are deadlines to add to the calendar to ensure both your employees and your business benefit from the tax breaks.

EMI: Dates and deadlines to remember

• HMRC valuation approval can take two to six weeks.
• You have 90 days following HMRC’s approval to grant the options.
• The date you grant EMI options because employees must accept the option agreement on or before the grant date.
• Complete an end-of-year return for each registered EMI scheme following the end of the tax year in which the grant is made.

Some context would be helpful here, so let's go into a bit more detail.

EMI valuations

You’ll need an EMI valuation approved by HMRC that outlines the Unrestricted Market Value (UMV) and the Actual Market Value (AMV). Approved valuations provide tax certainty for all parties.

It can take two to six weeks to hear back from HMRC and whether or not they’ve approved your valuation, so bear that in mind.

Share scheme valuations are a specialist area with many traditional providers charging thousands of pounds per valuation. With Vestd, EMI valuations are included in your pricing plan (one less thing to worry about).

Notifying HMRC

In 2023, the government announced changes to the EMI scheme. They proposed an extension on the time limit for notifying the grant (the awarding) of EMI options, to allow for more time.

Until recently, companies had 92 days to submit an initial notification to HMRC about EMI grants. However, as of 6 April 2024, companies have till the end of the tax year (so in this case, 6 July 2025).

The aim? To simplify processes for businesses - particularly SMEs, who, according to HMRC, have 45,000 individuals receiving EMI options annually. This extension aims to reduce instances of late notifications and the disqualification of EMI options.

Vestd helps reduce the risk of accidentally missing a deadline by sending platform reminders ahead of time. 

Granting EMI options

Once you have your valuation in hand, it's time to set sail and grant those EMI options. Remember, you've got 90 days from the receipt of the HMRC’s approval to grant the options for them to qualify under the agreed valuation.

You can set the grant date anywhere within that valuation period of 90 days.

Any options granted after this period won't be covered by that particular valuation, potentially leaving you and your employees with unexpected tax liabilities down the line. So, set your course and grant those options within the time frame.

Signing the option agreement

Signing an options agreement is a pivotal step for both companies and employees as it formalises the terms and conditions of EMI options granted to employees, outlining crucial details such as the number of shares, exercise price, vesting terms, and any applicable restrictions or conditions.

And, in a way, it signifies an employee's commitment to the company and its growth. An employee has to sign or digitally accept the option agreement on or before the grant date.

With Vestd, there's no paperwork flying back and forth; employees digitally view and accept their agreements, which you can then add to a secure data room. Sorted!

Annual return duties

You must complete an annual end-of-year return form (AKA annual notification) via the Employment Related Securities (ERS) online service, in which you will report details about your EMI scheme.

This usually includes company information, EMI scheme participant details, option grant and exercise dates, exercise prices per share, and any scheme changes during the tax year.

Essentially, this form ensures compliance with tax regulations and transparency in employee incentive programs.

As mentioned at the start, as of 6 April 2024, you’ll no longer need to submit an initial notification within 92 days of the grant. Instead, you’ll inform ERS during your next annual return (due early July of the following year).

While these EMI dates and deadlines may seem daunting at first glance, with the right guidance and the right tools, keeping on top of them is easier than you think.

Need some guidance? Vestd are here to help. Take the quiz to find out if your company is EMI eligible or book a call with us. You can also download our handy guide.

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