Companies with a registered EMI scheme have to file an end-of-the-year return template to HMRC on or before 6 July every year. You can now generate this return template with all the necessary details directly on Ledgy.



Here's a quick demo from our engineer, Marlies:

The results:

  • an Ods file which you can verify and then submit to HMRC.

  • The EMI annual return template includes 5 tabs, Ledgy will complete the most commonly applicable: EMI40_NonTaxable_V3, EMI40_Taxable_V3 and EMI40_RLC_V3. This includes any grants that have been cancelled, settled and exercised.


How it works

1. Prep your EMI, stakeholder and company data so that they are fully up to date

  • EMI plans and individual grant details

    Ensure that within each EMI plan, the grant type has been set to EMI

    Any exercise, cash settlement or terminations can be reflected per grant by clicking on the Three Dots to edit.

  • Enable values to NIC election or agreement

    Grant → From plan: {select a EMI plan}

  • Enable values to Section 431 election and Amount subjected to PAYE

    Transactions page → Find a grant from an EMI plan → Exercise this EMI grant

  • EMI valuations

    You can enter the EMI valuation like any other company valuation event: go to Ownership > Transactions > Add Valuations and select EMI from the drop down menu.

  • National Insurance Number (NIN) for each EMI option holder

    To store your stakeholders' NIN on Ledgy it is necessary to create a stakeholders' custom field called "NIN".

    You can easily add this as a custom stakeholder detail in bulk on the Stakeholder page.

    To find more information on bulk edit, please view this article. Alternatively, you can also edit individual stakeholders’ details: click on "Custom stakeholder details" and create a custom field named "NIN:" followed by the stakeholder's NIN number (kindly refer to the example below).

    Note: the custom field needs to be named exactly "NIN:" so that it's correctly retrieved on the EMI Reports page

  • Company PAYE reference

    • This can be added or edited with Company Settings > General > Edit company profile


2. Select the date range

  • By default, this is set to the beginning and the end of the latest tax year defined by the authority.

  • You can change the From date depending on when your EMI scheme was created


3. Enter any disqualifying events

To create a disqualifying event:

You’ll be asked to provide more detail onthe event where applicable. This can include the date, nature, affected grant, affected stakeholder and affected share class.

If you seek more information on disqualifying events, check out the official EMI documentation here.

The full list of events:

  1. Company came under control of another company

  2. Company stopped meeting the trading activities requirement

  3. Option holder stopped meeting the working time requirement

  4. Terms of the option changed

  5. Change in share capital

  6. Partial share class conversion

  7. Option holder reached maximum entitlement of EMI and CSOP

  8. Company did not start to carry on a qualifying trade


4. Download the file for a final review

As seen in the first video, use the download button at the top right corner of the page to download the report.


5. Upload to HMRC

Once you have reviewed the data on the file, please upload the .ods template to HRMC directly on their website.


FAQs

What data go to which sheet?

  • RLC if your EMI grant has been terminated or expired and the termination date or expiry date falls into the date picker column

  • NonTaxable consists of EMI exercises that satisfy the following conditions:

💡 NonTaxable conditions

  1. If the exercise price was equal to or more than the share’s AMV at the time of granting AND there was no disqualifying event

  2. If the exercise price was equal to or more than the share’s AMV at the time of granting AND Options were exercised within 90 days after a disqualifying event

  • Taxable consists of EMI exercises that are the inverse of the above conditions. Meaning every valid EMI exercise that does not satisfy the above conditions goes to the taxable tab.


Why can’t I find an EMI grant in RLC or an EMI exercise in Taxable or NonTaxable?

  • Is EMI grant’s expiry date/ termination date within the date picker?

  • Is EMI exercise’s date within the date picker?

  • Does this EMI exercise has a valid EMI valuation?

  • Has it possibly been combined with another row, as the date and stakeholder coincide?


How are first name, second name, and last name determined?

  • The general rule is to take the first string of the full name as first name, and last string of the full name as last name. Everything in between will be consider as second name.


When are exercised shares defined as sold?

  • If a stakeholder S has X amount of EMI exercised on date Y in share class Z, and there are also X shares being transferred or decreased from stakeholder S on date Y in share class Z, this column will be YES, otherwise NO.

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