Explanatory note (accessible version)
Updated 23 November 2023
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Clause 1: Enterprise management incentives: notifications
Summary
- This clause extends the time limit for an employer company to notify HM Revenue and Customs (HMRC) of a grant of Enterprise Management Incentives (EMI) options from 92 days after the date of the grant of the option to 6 July following the end of the tax year in which the option was granted. The amendments will have effect in relation to share options granted on or after 6 April 2024.
Details of the clause
2. Subsection (1) introduces the amendments to Part 7 of Schedule 5 of the Income Tax (Earnings and Pensions) Act (ITEPA) 2003.
3. Subsection (2) amends paragraph 44(1) (time within which notice of options must be given to HMRC) by replacing “within 92 days after the date of the grant of the option” with “on or before 6 July following the end of the tax year in which the option was granted” to amend the time within which the notice must be given.
4. Subsection (3) makes a consequential amendment to paragraph 46(5) (time for giving of notices of enquiry) to provide that (except where paragraph 46(6) applies), a notice of enquiry may not be given by HMRC more than 12 months after the 6 July following the end of the tax year in which the option was granted.
5. Subsection (4) provides that the amendments in subsections (2) and (3) have effect in relation to EMI share options that are granted on or after 6 April 2024.
Background note
6. EMI is a tax advantaged share scheme introduced in 2000 which is targeted at small and medium sized companies to help them recruit and retain key employees.
7. Following representations made in response to the call for evidence into EMI launched in 2021, the government announced at Spring Budget 2023 three changes to simplify the process to grant share options and reduce administrative burdens. Two of these changes, the removal of the requirement to set out details of share restrictions in option agreements and the removal of the requirement to sign a working time declaration were included in the Finance (No. 2) Act 2023 and take effect from 6 April 2023.
8. This clause, which introduces the other change that was announced at Spring Budget 2023, extends the time limit for an employer company to notify HMRC of a grant of options. It takes effect from 6 April 2024.
9. If you have any questions about this change, or comments on the legislation, please contact Anne Berriman (email: [email protected]).