Enterprise Management Incentives: Extending the time limit to submit a notification of a grant of options
Updated 23 November 2023
© Crown copyright 2023
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected].
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/enterprise-management-incentives-extension-of-the-time-limit-to-submit-a-notification-of-a-grant-of-options/enterprise-management-incentives-extending-the-time-limit-to-submit-a-notification-of-a-grant-of-options
Who is likely to be affected
Companies that use the Enterprise Management Incentives (EMI) scheme, a tax advantaged share scheme available to eligible companies in the UK.
General description of the measure
This measure will extend the time limit for a company to notify HMRC of a grant of EMI options, from 92 days following the grant to 6 July following the end of the tax year in which the grant was made.
Policy objective
This measure supports small and medium sized companies to recruit and retain staff by simplifying the process to grant EMI options.
Background to the measure
At Budget 2021, the government published a call for evidence to seek views on whether the EMI scheme should be expanded. At Spring Statement 2022, the government concluded that the EMI scheme remains effective and appropriately targeted, but expanded the review to consider the Company Share Option Plan (CSOP). Changes to CSOP were announced at the fiscal statement made on 23 September 2022 and introduced from 6 April 2023.
Many who responded to the call for evidence commented on the administrative requirements of the EMI scheme, in particular the process to grant options. At Spring Budget 2023, the government published a response to the call for evidence and announced a package of measures. Two of these measures, the removal of the requirement to sign a working time declaration and the requirement to set out details of share restrictions in option agreements were introduced in the Finance (No. 2) Act 2023 and apply from 6 April 2023.
This measure extends the time limit for a company to notify HMRC of a grant of EMI options.
Detailed proposal
Operative date
The measure will apply to EMI share options granted on or after 6 April 2024.
Current law
Current law is included in Schedule 5 of the Income Tax (Earnings and Pensions) Act (ITEPA) 2003.
Proposed revisions
Legislation will be introduced to modify Schedule 5 ITEPA 2003 in the following ways:
- paragraph 44(1) will be amended to extend the time limit to submit a notification of EMI options from 92 days following grant, to 6 July following the tax year in which the option was granted
- a consequential amendment will be made to paragraph 46(5) to provide that the 12 month enquiry window will run after 6 July following the end of the tax year in which the option was granted
The amendments will apply to options granted on or after 6 April 2024.
Summary of impacts
Exchequer impact (£ million)
| 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 |
|---|---|---|---|---|---|
| Negligible | Negligible | Negligible | Negligible | Negligible | Negligible |
This measure is expected to have a negligible impact on the Exchequer.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
Tens of thousands of individuals are granted EMI options annually. This measure ensures that companies are given a longer time period in which to submit an EMI notification of a grant of options. Individuals will not need to do anything differently to what they currently do now.
However, the change is likely to result in fewer late notifications and less possibility of options becoming disqualified, which improves how the scheme works for individuals who receive EMI options.
This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be any negative impacts for those in groups sharing protected characteristics.
Impact on business including civil society organisations
This measure will have a negligible impact on a few thousand small and medium companies granting options under EMI schemes each year. The measure will help employer companies as there will be a longer time period in which to submit an EMI notification following a grant of options. One-off costs could include familiarisation with the new rules. There are not expected to be any continuing costs.
It is expected overall to improve business’ experience of dealing with HMRC as there will be less possibility for late submissions of notifications and the subsequent administrative activities required to put the matter right.
This measure is not expected to impact civil society organisations.
Operational impact (£ million) (HMRC or other)
The financial consequences of this measure for HMRC are small.
The proposals will require IT changes, currently estimated to cost in the region of £60,000, to support safe implementation of this policy.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through communication with affected taxpayer groups.
Further advice
If you have any questions about this change, please email: [email protected].