EMI has a small number of deadlines and almost no forgiveness. Miss the wrong one and the options stop being EMI options, with the tax consequences falling on your employees rather than on you.
Notification: what changed
For options granted on or after 6 April 2024, the grant is notified to HMRC by 6 July following the end of the tax year in which it was made. Previously it was within 92 days of grant.
That is a significant relaxation. A grant made in May now has until the following July, rather than roughly three months.
Your scheme rules probably still say 92 days
Scheme rules and option agreements drafted before the change usually specify notification within 92 days, because that was the law when they were written. Where your documents say that, the contractual deadline continues to bind you even though the statutory one has moved.
So a company relying on the new July date, while holding documents promising 92 days, is in breach of its own scheme rules. It is worth reading what your documents actually say rather than what the current law allows.
What is coming in 2027
From 6 April 2027 the separate notification requirement is being removed altogether. Grants will simply be reported through the annual return.
This simplifies things, but it does not remove the obligation. It moves it into a filing that a number of companies already forget.
The annual return
Due by 6 July for every registered scheme, every year. It must be filed even where nothing happened during the year: no grants, no exercises, no leavers, still a return.
Nil returns are the ones companies miss, because nothing prompts them. There is a penalty for late filing, and a persistently unfiled return raises questions about whether the scheme has been maintained properly, which is precisely the sort of thing that surfaces in diligence.
Deadlines that are easy to forget
Valid for 90 days
An agreed valuation on form VAL231 is normally valid for 90 days. Grant inside that window or the agreed figure no longer applies and you are back to arguing the value later.
90 days to exercise
Where a disqualifying event happens, such as the company ceasing to meet the conditions or the employee dropping below the working time requirement, options must be exercised within 90 days to keep the favourable treatment. Miss it and the gain from that point is taxed as income.
Before the first notification
The scheme has to be registered with HMRC before you can notify a grant under it. Companies occasionally grant first and discover the registration has not been done.
The working time requirement is ongoing
An employee must spend at least 25 hours a week, or 75 per cent of their working time, on the business of the company. This is not only tested at grant. If someone moves to part time, takes on substantial outside work, or goes on extended leave, that can be a disqualifying event with the 90 day clock attached.
Very few companies monitor this, and it is one of the more common ways EMI treatment is lost quietly.
A practical calendar
- At grant. Check the valuation is still inside its 90 days. Take the working time declaration at the same time, not later.
- Within your scheme's own deadline. Notify. Check whether your documents say 92 days before relying on July.
- Every 6 July. File the annual return, including nil returns.
- Whenever circumstances change. Ask whether it is a disqualifying event, and if so the 90 day clock is already running.
Not sure your scheme is compliant?
- You are unsure whether past grants were notified in time
- Your scheme rules were written before April 2024
- You have missed an annual return, including a nil one
- An employee has gone part time or changed role
Most compliance problems are recoverable if they are found early. The ones that are not tend to be the ones nobody looked for.
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This article sets out the general position and is not advice on any particular set of facts. Thresholds and rates are those applying at the date of publication.