Find out about changes to restrictions in Enterprise Management Incentives (EMI) options agreements and working time declarations.
End of year deadline
If you operate an employee share scheme you must file an end of year Employment Related Securities (ERS) return.
For the 2022 to 2023 tax year you must submit an end of year ERS return (on or before) 6 July 2023. If you miss this deadline, you will receive a late filing penalty.
You must submit a return or nil return for every scheme that you have registered on the ERS online service.
If you have registered a scheme in error, or it is no longer operating, you must cease the scheme. You must still submit an annual return for the tax year in which the final event date falls.
Penalty impacts
A £100 penalty will be issued automatically if the end of year ERS return, including nil returns where appropriate, is not submitted by 6 July 2023.
Additional automatic penalties of £300 will be charged if the return is still outstanding 3 months after the original deadline of 6 July, and a further £300 if it’s still outstanding 6 months after that date.
Even if you have received and paid the initial penalty, you must still submit an end of year or nil return to meet your filing obligations.
Enterprise Management Incentives (EMI): changes regarding restrictions in option agreements and working time declarations
At the Spring Budget on 15 March 2023, the government announced changes regarding:
- restrictions in EMI options agreements
- EMI working time declarations.
These changes are set out in ERS Bulletin 49. Further details are included in this bulletin.
Restrictions in EMI option agreements
For EMI options granted on or after 6 April 2023, employer companies are no longer required to set out within the option agreement, details of any restrictions on the shares that can be acquired. This change also applies to EMI options granted before 6 April 2023 which have not yet been exercised.
However, before entering into an option agreement, it is still necessary for an employee to be aware of all the terms and this includes any restrictions on the shares that can be acquired.
EMI working time declarations
For EMI options granted on or after 6 April 2023, employer companies will no longer need to declare that an employee has signed a working time declaration when they are issued an EMI option.
Therefore, from 6 April 2023, there will be no requirement for an employee who has acquired EMI options to sign a working time declaration.
The changes also apply to EMI options granted before 6 April 2023 which have not yet been exercised.
Employees must still comply with the working time requirement itself. Further details about the working time requirement are at Enterprise Management Incentives (EMI): Eligible employees: Working time commitment.
The Employee Tax Advantaged Share Scheme User Manual (ETASSUM) has been updated to reflect the EMI changes:
-
Changes to grant of options from 6 April 2023 — effect on options granted before 6 April 2023
-
Changes to grant of options from 6 April 2023 — Examples of apportionment
Changes to the dividend allowance
From 6 April 2023, the government reduced the dividend allowance from £2000 to £1000. From 6 April 2024, it will be reduced to £500. This means that employees who receive dividends from shares acquired through a share scheme, including Share Incentive Plans (SIP), may be liable to pay tax on dividends where they were not before.
Employees who have received taxable dividends will need to report them to HMRC.
The changes to the dividend allowance do not affect dividend shares acquired through a SIP, where dividends received from SIP shares are used to buy further shares through the scheme. These dividends are not taxable.
