Enterprise Management Incentives: improvements to the process to grant options

The measure

The government has announced three changes to simplify the process to grant options under an Enterprise Management Incentive (EMI) plan, a tax-advantaged share option plan available in the UK. 

The proposed changes apply in respect of the following requirements which currently exist in the legislation: 

1. the company must set out within the option agreement the details of any restrictions on the shares to be acquired under the option; 

2. the company must declare that an employee has signed a ‘working time declaration’ when they are issued an EMI option;  

3. the EMI options must be notified to HMRC within 92 days of the date of grant.

The government has announced that the requirements set out in 1 and 2 above will be abolished for options granted on or after 6 April 2023. These changes will, however, also apply to options granted before 6 April 2023 but which have not been exercised until on or after that date. (Note, the employee must still meet the working time requirements set out in the EMI legislation; it is just no longer a requirement that the company must state that the employee has signed the working time declaration.) 

In relation to the third condition, the government has proposed that the time limit for notifying EMI options be extended to 6 July after the end of the tax year in which the EMI options were granted.  

Who will be affected?

Companies operating EMI plans.  

When will the measure come into effect?

As noted above, the first two changes (in respect of the restrictions on shares and the working time declaration) would, effectively, apply to EMI options exercised on or after 6 April 2023 (irrespective of when granted). 

The change to the time limit for notifying EMI options would apply for options granted on or after 6 April 2024.