EMI end of year returns

Charles BrecqueCharles Brecque
Last updated on:
April 12, 2022
Published on:
April 12, 2022

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SME businesses in the UK which meet the HMRC qualifying rules can register an Enterprise management incentive scheme (EMI). An EMI scheme allows employers to grant EMI options to employees. EMI options are stock options which have tax benefits. Businesses with registered EMI schemes need to submit an annual return to HMRC after each tax year in order to let HMRC know if employees have exercised their options or not. This short article explains the steps you need to follow in order to submit your EMI annual return.

How to manage Enterprise Management incentives schemes?

To create and manage your EMI schemes, you will need to access your HMRC account with your 12 character Government Gateway ID and password.

Sign in using your Government Gateway credentials

Once you're logged into your HMRC account, you'll view a page which lists the services for your company such as PAYE and Employment related securities (ERS). You can create and manage EMI share option plans by clicking on the ERS section.

Submit Employment related securities returns using your Government Gateway account

Simply click on the link and you'll access your PAYE page which will give you the option to view your EMI schemes, file returns and notifications, register a scheme or arrangements or make Enterprise management incentives (EMI) notifications.

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How to submit an EMI annual return?

The company secretary or the person acting as the company secretary must complete an online annual return on or before 6 July for each registered EMI scheme. The annual return must indicate whether EMI options have been exercised, adjusted, replaced, released, lapsed or cancelled (for example if an employee leaves before the options vest). If nothing has changed then you must still submit nil returns.

Clicking on view returns will provide a list of the EMI share option plans you have registered with HMRC. Click on the scheme for which you'd like submit an annual return. You will then be able to select the type of notification you'd like to submit.

HMRC online service for submitting an ERS return

You will then be able to see annual returns for previous tax years and the option to create new ones.

EMI annual reporting

Submitting a return simply requires clicking on the link. You can submit a nil return if nothing has changed during the tax year. If not, you must make an online filing of HMRC's EMI end of year return template which is available to download as an ods file. The file provides a procedure for adjustments, replacements, released, lapsed or cancelled options, non-taxable and taxable exercising of options. The document requires employee information such as their national insurance number as well as information about the options such as the actual market value of the shares, their exercise price and the date of grant of the the options. HMRC provide further information on how to complete the ods document in guidance notes and technical notes. You can contact the HMRC technical support team if ever you encounter technical difficulties during the online filing.

Why should you grant EMI options to your employees?

As an employer, granting EMI options to your employees is a great way to give them ownership in your company so that they can participate financially in the company's success. You can incentivise potential candidates with stock options in an employment offer letter and your employment contracts can contain provisions around the grant of share options. To create lawyer-approved employment agreements which meet your requirements, sign up to Legislate today.

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