EMI Options UK: Grants, Vesting and HMRC Reporting

EMI options need a clear record from the proposed grant through to exercise or lapse. This guide helps UK founders and finance teams organise the decisions, documents and reporting responsibilities. It has been refreshed for current guidance; the existing URL has been retained for continuity.

For value, methods and evidence, read HMRC EMI share valuation. For scoped report or submission support, see HMRC share valuation services.

Government guidance checked on 23 October 2026. Eligibility and filing obligations depend on the company, relevant dates and facts.

Separate eligibility, valuation and administration

A valuation does not confirm that the employer, employee and option meet every EMI condition. Keep an eligibility assessment, a valuation file and an administration calendar as separate controls. Decide who owns each task and who checks completion.

The 2026 changes can affect company limits and the qualifying exercise period for many employers. Specified Northern Ireland companies and relevant group situations need particular care. Use HMRC’s current limits and exercise-period guidance rather than assuming an old option automatically has new terms.

Create one complete grant file

• Final option agreement, company approvals and the relevant share rights.
• Cap table and option register showing the position before and after the grant.
• Valuation report, source information and any HMRC agreement letter.
• The actual grant date, employee details and approved exercise price.
• The notification owner, review date, deadline and submission receipt.
• A record of any subsequent changes, exercise, lapse or cancellation.

Use a controlled version of the documents. A revised cap table sent by email should not silently replace the version supporting an approved grant. Document what changed and whether another approval or review is needed.

Keep the three timing questions separate

See HMRC’s EMI grant notification guidance and annual ERS return and file-checking guidance. A file-format check is not the same as submitting the required notification or return.

Worked reporting-calendar example

Under the current grant-notification rule, an option granted in the 2026/27 tax year is notified by 6 July 2027. Record the actual grant date and the applicable tax year. Keep annual reporting as a separate checklist item, even where the calendar date is the same.

Historical deadlines should remain labelled as historical. A missed deadline for an earlier year is not corrected by changing the date in the option register. Investigate the position promptly and obtain advice on the appropriate response.

Vesting, exercise and leavers

Explain the commercial terms to the employee: what vests, when exercise is permitted, what must be paid and what happens on leaving. An exit-only arrangement and an immediately exercisable option may operate differently. Avoid presenting a common market practice as a statutory rule.

Review changes in employment, working time, company ownership and the agreement with the relevant adviser. HMRC’s guidance on taxable EMI exercises identifies discounted grants and exercise more than 90 days after a disqualifying event as situations where tax can arise. This is separate from the 90-day valuation agreement period.

Set a practical review routine

• Reconcile the option register to approved agreements and the cap table.
• Assign a named owner and checker for grant notifications and annual returns.
• Retain copies before submission because online records may not preserve the detail you need.
• Flag leavers, variations, financing rounds and transactions for review.
• Check that payroll, legal and tax advisers have the information relevant to their tasks.

A simple exceptions log is useful: issue, date identified, responsible person, next action and evidence of closure. The purpose is to make unresolved items visible before a funding round or exit, not to label every option as compliant without investigation.

Frequently asked questions

What is this EMI options guide for?

It covers the practical administration of EMI grants, vesting, changes and HMRC reporting. Valuation methodology is covered in our separate EMI share valuation guide. Company, employee and option eligibility must be assessed for the facts of the grant.

When must a grant made on or after 6 April 2024 be notified?

HMRC’s current guidance requires notification on or before 6 July following the end of the tax year in which the grant is made. Check the grant date, use the relevant ERS process and retain the submitted information and receipt.

Is grant notification the same as the annual ERS return?

No. Grant notification and annual reporting are separate administrative requirements. Registered schemes generally need an annual return, including a nil return where there is nothing to report, by 6 July following the tax year.

Does an agreed valuation last for 90 days from the report date?

No. The HMRC agreement period runs for 90 days from the date of agreement. Keep the agreement letter and check any changes that may affect reliance before the options are granted.

Does vesting mean the employee already owns shares?

Not necessarily. Vesting usually determines when options can become exercisable under the agreement. Ownership normally follows valid exercise and the required share issue or transfer. The documents govern the actual position.

What should we do when an employee leaves or the company changes?

Review the agreement and relevant EMI conditions promptly with the appropriate adviser. A leaver event, change in working time or company transaction may affect rights or tax treatment. Do not assume a standard exercise window applies to every option.

Can Consult EFC administer every legal and tax aspect?

The engagement must specify the work included. Valuation, financial schedules, legal drafting, payroll, tax advice and ERS submissions have different responsibilities. We agree the scope and coordinate with your existing advisers where appropriate.

Get the valuation and reporting responsibilities clear

Start with the proposed grant, current documents and decision deadline. Consult EFC can scope valuation and financial support, with legal drafting, tax advice and filing responsibilities expressly agreed. Discuss your EMI valuation requirements.

About the author: Kishen Patel ACA, founder of Consult EFC. View the ICAEW member profile.

Kish Patel ACA, ICAEW · Founder, Consult EFC

Over 12 years across Big Four audit, Investment Banking, and corporate advisory. Kish works with SaaS founders, tech companies, and ambitious UK SMEs from £1M to £50M in revenue on fundraising, valuations, exit planning, and financial strategy. ICAEW regulated. Big Four trained. Based in London.