July 2, 2020
For the tax year 2019/20, the deadline for filing the share schemes annual returns is 6 July 2020. The filing obligation applies in relation to any new share schemes implemented as well as existing share schemes. HMRC do not send out any reminders. As there are automatic penalties for late-compliance, we recommend filing your online annual return without further delay. As we set out below, these reporting requirements apply not only to formal share schemes, but to many other awards of shares or options to employees or directors.
Please note that new share schemes will need to be registered with HMRC first before returns can be filed. The registration process may take a week or two and therefore it is imperative that the registration process is completed before the 6 July deadline.
What needs to be done?
Filings of the annual returns are done using HMRC’s Employment Related Securities (ERS) Online Services which can be accessed through the Employer’s PAYE online account. This can be carried out by the company directly or by any agent authorised to act on its behalf.
Each employee share scheme requires a separate annual return. For group companies, only one company within the group needs to submit a return, irrespective of other participating group members.
What needs to be reported?
Each and every ‘reportable event’ that has occurred in the tax year 2019/20 must be notified to HMRC on the annual return. This includes:
- the grant of a new option to an employee/director
- the exercise of an option by an employee/director
- the acquisition of shares (or interest in shares) by an employee/director
- adjustment of options
- the assignment or surrender of options by an employee/director for consideration
- changes to the restrictions on shares and disqualifying events
- any other events which give rise to a tax charge in relation to employment related securities(e.g. shares/options/loan notes )
If in any doubt as to whether to report a particular event, further advice should be sought.
How does this affect EMI and other tax advantaged share schemes?
For tax-advantaged share schemes, namely, EMI, CSOP, SAYE and SIP schemes, each relevant event also needs to be reported to HMRC. However, each of these schemes has its own form of online annual return which should be filed separately.
If there has not been any activity in the previous tax year, a ‘nil return’ should be submitted.
What are the penalties for failure to report?
There are penalties for failure to report on or by 6 July, starting at £100. Most companies are fully appraised of these reporting obligations particularly if they outsource their PAYE, since typically that supplier will have notified them. However HMRC do not send out reminders. Some companies may of course do their own PAYE. In practice most finance directors with responsibility for employees will be aware of these requirements. Note that whilst Covid-19 may possibly be accepted by HMRC as a reasonable excuse for late filing, one should not rely on that without good reason. The company would have to explain how the pandemic affected their ability to meet the deadline.
Where can I find further information?
For ease, relevant HMRC links are as follows
Please do feel free to contact us if you require further advice.