EMI options | Notification process set to change from next tax year

For EMI options granted on or after 6 April 2027, separate notifications to HMRC will no longer be required. Notifications will instead be made as part of the annual returns process.

Companies granting EMI options during the current 2026/27 tax year still need to notify such grants separately to HMRC by no later than 6 July 2027, in addition to filing their end of year returns.

What are EMI options?

EMI is a flexible tax-advantaged employee share option arrangement that offers employees of qualifying companies relief from income tax and National Insurance contributions (NICs) on exercise of the options.

Originally aimed at smaller companies, the EMI regime has recently been expanded so that many larger companies may now qualify. Employees must satisfy a working time requirement of 25 hours a week or, if less, 75% of their working time, and the option terms must contain specified information.

What is EMI notification?

To qualify for tax relief, a company must notify HMRC of the grant of EMI options by 6 July following the end of the tax year in which the EMI options were granted. This is done using HMRC's employment-related securities service.

Failure to notify HMRC of the grant of EMI options has serious consequences. The options will not qualify for tax relief, meaning that income tax and, typically, NICs will be payable on exercise. 

Notification is currently a separate requirement from the obligation to submit end of year returns by 6 July following the end of the relevant tax year.

How is the process changing?

The requirement for a company to submit separate EMI notifications is to be removed from 6 April 2027, and a consultation on the draft legislation has recently closed. 

For EMI options granted on or after 6 April 2027, a company will instead report a grant of EMI options to HMRC through the EMI end of year return. In effect, the notification requirement will be combined with the information to be provided as part of the EMI annual returns process. 

HMRC has confirmed that the EMI end of year return template will be updated to require details of  a grant of EMI options, beginning with the return for the 2027/28 tax year, which will be submitted from 6 April 2028.

Osborne Clarke comment

This is a future change to the EMI notification process. Unfortunately, it doesn't go as far as removing the notification requirement altogether. There will still be a notification requirement – it is just that it will become part of the EMI end of year return.

Companies should diarise the 6 July deadline and allow sufficient time to deal with notifications, particularly during this transitional period. 

Companies granting EMI options during the current 2026/27 tax year should note that they need to continue to separately notify HMRC of the grant of EMI options using HMRC's notification template and submit their end of year returns by no later than 6 July 2027.