Spring Budget 2023 – Changes to the Enterprise Management Incentive ("EMI") options from April 2023

On 15 March 2023 the Chancellor announced a number of administrative changes to simplify the tax system as part of the Spring Budget 2023.

These changes are intended to make the tax system easier for small businesses to interact with, driving growth by freeing up both time and money.
 
As part of this package, changes to EMI options have been announced bringing more good news for those operating tax-advantaged option plans. These changes are:
 

• it will no longer be necessary for employees receiving an EMI option to sign a working time declaration or for the details of share restrictions to be set out within EMI option agreements (effective for options granted from 6 April 2023); and
• the deadline for a company to notify HMRC of the grant of an EMI option will be extended from 92 days following the date of grant, to 6 July following the end of the tax year in which the EMI option is granted (effective for options granted from 6 April 2024), aligning the notification deadline with the deadline for submission of ERS annual returns each year.

 
Given a breach of these technical requirements can result in options not qualifying for the EMI tax benefits, their removal will be welcome news to companies granting EMI options.
 
These changes to EMI options come after the Government's reforms to another tax-advantaged share plan, the Company Share Option Plan ("CSOP"), announced in September 2022. These reforms will see the individual CSOP share option limit double from £30,000 to £60,000 and the removal of certain restrictions on the type of shares which are eligible for inclusion within a CSOP. The reforms to the CSOP will also take effect from 6 April 2023 and we shall provide further details of these changes over the coming weeks.
 
The Government also launched a call for evidence on the two all-employee tax advantaged share plans: the Share Incentive Plan (SIP) and Save As You Earn (SAYE) plan. It will use this opportunity to consider opportunities to improve and simplify both these plans. The Fieldfisher Equity Incentives team will provide further details of these reforms when they are announced.
 
Please contact a member of the Fieldfisher Equity Incentives team for further information or guidance on these issues.