ETASSUM56010 - Enterprise Management Incentives (EMI): Option notifications: Registration & notice of grant of option to HMRC

Paragraph 44, Schedule 5 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA)

Notification

If a company grants EMI options, including replacement options, it must notify these to HMRC using the online ERS service. For options granted on or after 6 April 2024 the notification of grant must be notified to HMRC by 6 July following the end of the tax year in which the options were granted. For options granted before 6 April 2024 the notification of the grant must be notified within 92 days of the date of grant.

From 6 April 2014 companies granting EMI options will need to have registered with the PAYE online service (if they have not already done so) and register the scheme (or other arrangement) under which options are granted before they make the first notification of grants of EMI options. Online ERS notification of EMI options is a mandatory requirement. If a company feels it is unable to file online for any reason, it should provide full details explaining why this is the case to the Employee Shares and Securities Team –

Post: Charities, Savings and International 2, HM Revenue & Customs, BX9 1BU.

E-mail: shareschemes@hmrc.gsi.gov.uk

Guidance on registering schemes and notification of options can be found here: https://www.gov.uk/business-tax/employment-related-securities

Reasonable Excuse

If a company believes it has a reasonable excuse for not notifying HMRC on time, it should send the notification without unreasonable delay once the excuse ceases to exist. The company should advise HMRC of all of the facts relevant to the delay. A delay or failure on the part of the company’s agent is not a reasonable excuse on its own.

If HMRC accept that the company has a reasonable excuse for not notifying the grant of option by 6 July following the end of the tax year in which the options were granted, or within 92 days if the grant was before 6 April 2024, they will provide the company with a reasonable excuse code to enable the notification to be submitted online.

If the option is granted by the trustee of an employee benefit trust or another shareholder, the employer is still bound by the requirement to notify the grant of the option. The employer will need to obtain the relevant information from the trustee or shareholder to comply with this requirement, which is set out at Paragraph 44 of Schedule 5 ITEPA.

Working time declaration

From 6 April 2014 until 5 April 2023, companies were required to obtain a written declaration by the employee that he or she satisfied the working time requirement. A copy needed to be provided to the employee and the company was also required to retain the declaration. It was acceptable for the employee’s working time declaration to be contained within the option agreement itself, provided that the option agreement was signed by the employee and the employee received a copy of the option agreement within seven days of such signature.

From 6 April 2023, the requirement for an employee who has acquired share options to sign a working time declaration has been removed.   

Employer companies are no longer required to declare that an employee has signed a working time declaration when they have been issued with an EMI option, and are no longer required to retain the signed working declaration and provide the employee with a copy. This amendment does not remove the working time requirement itself. Further guidance on this change can be found at ETASSUM54080.