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Markel Tax

29 May 2020

It’s time to file your share scheme returns

Following the end of the 2019/2020 tax year, the employee share scheme annual returns deadline is fast approaching.

If you operate a share plan or there has been any type of equity transaction involving UK employees or directors, you will have to submit a return to HMRC by 6 July. This can be done via HMRC’s employment related securities (ERS) online service, which can be accessed via your Employer's PAYE online account.
We appreciate that share plan reporting may not seem to be a priority at the moment however, to date, there have been no official government announcements to postpone the ERS filing deadline or waive penalties for late filing.

There are different templates for each of the tax advantaged schemes: company share options (CSOP), save as you earn (SAYE), enterprise management incentive (EMI) and share incentive plan (SIP) plans. Non-tax advantaged awards and plans must be reported on the "other" template. If the template does not match the plan registration, the submission will be rejected.

Employers have an annual requirement to report any of the following events that occur in relation to ERS during a tax year (although we refer to ‘employees’ these rules apply to shares held by directors as well):

  • Grants of rights to acquire shares or other securities (e.g. options or long-term incentive plan awards) to employees

  • Acquisitions of shares or other securities by employees

  • The lifting of restrictions from shares or other securities held by employees

  • Disposals of restricted securities by employees.

These obligations extend to other reportable events involving shares or other securities which are acquired, or treated as having been acquired, by reason of employment.

Events that occur outside a formal employee share plan, such as an acquisition of shares or grant of options during a change of control or other transaction, can also give rise to reporting obligations.

You only need to register non-tax advantaged schemes when there’s a reportable event, for example: acquiring or disposing of shares; assigning or releasing share options.

What are consequences for a late return?

Penalties apply for late filing and incorrectly completed/formatted returns as follows:

  • 7 July 2020 or later – an immediate £100 penalty

  • 3 months late – additional £300 penalty

  • 6 months late – additional £300 penalty

  • 9 months late – additional £10 penalty for each day the return remains outstanding

Points to consider

Where a company needs to make a return for the first time, they will need to register a ‘scheme’ with HMRC before being able to submit the annual return.  HMRC’s use of the term ‘scheme’ is misleading, because there may be a series of reportable events taking place (for example, on a group reorganisation) which do not form part of an employee share scheme.

Registration is made through the "PAYE for Employers" section of HMRC's website. Any new tax advantaged plan or other employee share transaction will need a separate registration.

  • Register your share plans, it can take up to two weeks to receive a reference number from HMRC and a return cannot be filed without this.

  • If the return is not submitted in the correct format HMRC will reject the return.

  • Monetary values must be entered in pounds sterling up to 4 decimal points.

  • Dates must be entered in an exact format (yyyy-mm-dd).

  • Submit returns in good time to guarantee you meet the deadline.

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Tagged Employment taxes and share scheme COVID-19
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