In order to qualify for the beneficial EMI tax regime, an EMI option must be notified to HM Revenue & Customs within 92 days. To date, this has been done by post using the Form EMI1. This is set to change from 6 April 2014 and employers who grant EMI options must use a new online procedure.
In respect of all EMI options granted on or after 6 April 2014, the options must be notified to HMRC online (via “the PAYE Online” portal) within 92 days following the date of grant. Employers that are not already signed up for PAYE Online Services will need to sign up in order to submit these notifications (details can be found at www.online.hmrc.gov.uk). All EMI options granted before 6 April 2014 must still be notified using the existing Form EMI1 (within 92 days from the date of grant).
Under the current system, employees receiving an EMI option declare that they satisfy the “working time” requirement (required by the EMI code) by signing the Form EMI1. Under the new online system, employers will be required to seek this written declaration from the participating employees in a different form. Our recommendation would be for this declaration to be added to the EMI option agreement itself.
The following changes are also being introduced:
- All subsisting EMI options that have yet to be exercised must be registered online.
- The 2013/14 tax year is the last tax year in which a paper “EMI 40” annual return should be filed with HMRC (the deadline for filing is 6 July 2014). From 6 April 2015, EMI 40s will need to be filed online.
Employers that operate other, non-EMI, employee share schemes will also be affected by HMRC’s general share scheme administration moving online. See “Changes to the administration of share-based remuneration” for further details.