The Autumn Statement confirmed that the grant notification deadline for EMI options will be extended to 6 July following the tax year in which the option was granted. The extension will apply to options granted on or after 6 April 2024.
Background
The government is carrying out a review of all four of HMRC's tax-favoured plans. This is the last of the measures to be implemented as part of the government's simplification of the grant process for EMI options. It follows the changes that took effect from 6 April 2023 to remove the requirements to set out details of share restrictions in option agreements and to sign working time declarations (although the working time requirement itself was not removed). We have covered those changes previously here.
As part of the wider review, access to the company share option plan (CSOP) was widened with effect from April 2023, when the individual CSOP limit was doubled and previous share class restrictions were relaxed. Click here for more details on the CSOP changes.
What's changing?
From 6 April 2024, the deadline for notifying the grant of EMI options will be extended from within 92 days of grant to 6 July following the tax year in which the option was granted. As a result, any EMI options granted on or after 6 April 2024, but before 6 April 2025, will need to be notified to HMRC by 6 July 2025. This change broadly aligns the timing of notification of grant of EMI options with the existing deadline for:
- completing end of year reporting for share plans and arrangements
- registering new share plans and arrangements on the HMRC online system
- self-certifying new tax-favoured share plans.
Following implementation of the extension, HMRC's standard 12-month enquiry period will run from the new 6 July notification deadline.
HMRC guidance is needed on the practical implications of the extended deadline, for example in respect of the likely increase in options being exercised before notification and any changes to the process for making reasonable excuse claims for late notifications.
The extension to the notification deadline should reduce the number of late notifications and any resulting loss of tax favourable treatment, benefitting both companies operating EMI plans and their employee option holders.
Future changes
The remaining two tax-favoured plans are subject to ongoing review: the share incentive plan (SIP) and save as you earn (SAYE). The call for evidence for these all-employee plans closed on 25 August 2023, with improvements and simplifications eagerly anticipated, particularly by those companies who currently find them too onerous and costly to implement.
