Companies granting enterprise management incentive (EMI) options to their UK tax resident employees are reminded they must notify HM Revenue & Customs (HMRC) of the awards. Failure to do so means that the option is not EMI qualifying and will not be subject to the more favorable tax regime applying to such options.

Companies currently have 92 days from the date of the grant of an EMI option to file the notification of the grant with HMRC. Although this may seem like plenty of time, companies often struggle to first register their EMI plan and then meet the deadline for notification. As such, companies might need to cancel and regrant awards later to provide employees with the expected tax favourable EMI options.

To lighten the administrative burden on companies, for EMI options granted on and after April 6, 2024, the deadline for notifying HMRC of the grant has been extended from the current 92 days following the date of grant to July 6 following the end of the tax year in which the option is granted.

UK tax years run from April 6 to April 5 in the following calendar year. This means that for options granted on or between April 6, 2024, and April 5, 2025, the deadline for the notification of grant to be made to HMRC will be July 6, 2025. The new deadline for notification aligns with the HMRC deadline for the filing of employment related securities annual returns, which are also due by July 6 following the end of the tax year in which any relevant events occur.

The change means that all EMI grants made by a company in any one UK tax year can be notified to HMRC at the same time. However, HMRC has confirmed that it still remains possible to notify EMI grants to HMRC as they are made, and some companies may prefer to continue to do so notwithstanding the change. We would strongly urge companies to report on a regular basis rather than wait as long as 15 months in some cases to make the notification, to avoid the risk of missing the filing later.

EMI grants made prior to April 6, 2024, must still be notified to HMRC with the 92-day period immediately following the date of grant of the options.