Don’t miss the deadline for online share plan returns
The deadline for submitting annual online employee share plan returns to HMRC for the tax year ended 5 April 2019 is 6 July 2019. This is also the deadline for registering new plans which were first operated during that tax year.
We recommend that companies should try to complete registrations and annual returns well before then, as there are often last minute technical hitches.
Which plans should be reported?
Returns must be submitted for each individual share plan which is registered with HMRC. Plans include:
Tax-advantaged SIP, SAYE and CSOP
If the company operates more than one of any of these plans, for example if a plan was replaced with a new one after 10 years (as opposed to being renewed), there must be a separate return for each plan.
Tax-advantaged EMI options
A single return should be made in respect of all Enterprise Management Incentive (EMI) options, even if more than one plan is operated or if there are no formal plan rules.
“Other” share plans
All other non tax-advantaged share plans (often referred to as “unapproved”) or arrangements for employees to acquire shares should be reported as “Other” plans.
A company can register all these arrangements as a single “Other” plan or as two or more separate plans. If more than one “Other” plan is registered, a separate annual return must be made for each.
Where a set of rules contains more than one type of plan, for example an unapproved share option plan with a tax-advantaged CSOP schedule, this should be reported as two separate plans.
Which events should be reported?
The annual return should provide details of:
• the grant, exercise, cancellation, lapse or release of share options
• the grant, vesting, cancellation, lapse or release of other conditional share awards (eg under a standard “LTIP” or deferred bonus)
• all share acquisitions under a SIP or through other employment-related arrangements such as the award of growth shares or other restricted securities
• SIP shares forfeited or ceasing to be subject to the plan
• other taxable post-acquisition events, including the lifting of forfeiture restrictions on shares.
In the case of a tax-advantaged SIP, SAYE or CSOP, the company must also report amendments to “key features” of the plan, ie those which meet the requirements of the legislation for that plan, and adjustments to SAYE or CSOP options following a variation in the company’s share capital. The company must declare that the plan continues to meet those requirements after the changes have been made.
Different arrangements for EMI options
You should note that, to qualify for tax relief, the grant of tax-advantaged EMI options must be reported online within 92 days of the date of grant. If no EMI arrangement has already been registered, this must be done before the grant can be reported.
We recommend that companies should print out HMRC’s acknowledgement of option notifications, as it will not be possible to access this again at a later date.
What if there have been no reportable events?
If there have been no reportable events during the tax year, to avoid penalties the company must still make a “nil return” for each of its registered share plans.
If a plan has been terminated, the company can specify a “date of final event” on the annual return. A final online return must be submitted for the tax year which contains the “date of final event”, so it may be wise to specify a date towards the end of a tax year rather than at the start of a new one.
Even if a plan has been registered by mistake, the “date of final event” must be specified and a nil return submitted for the tax year.
Penalties for late and incorrect submissions
If a share plan return is not submitted by the 6 July 2019 deadline, a first late filing penalty of £100 will be issued.
Additional automatic penalties of £300 will be charged if the return is outstanding three months after 6 July 2019, and a further £300 if it is still outstanding after six months. If a return is still outstanding nine months after 6 July 2019, daily penalties of £10 per day may be charged.
HMRC can impose a penalty of up to £5,000 for a material inaccuracy in a return, unless this has been corrected by an amended return “without delay”.
For further information contact Mike Landon