Where an employer gives shares to an employee, sets up a share or share option scheme, or shares are acquired for less than their full value the employer company must register the share scheme or arrangement online with H M Revenue & Customs and file an annual return. An online return is required for each registered share scheme or arrangement which has to be filed by 6 July following the end of the relevant tax year. Even if there are no reportable events during the tax year, a nil return is still required for registered schemes or arrangements.
All new arrangements established after 5 April 2017 must be registered by 6 July 2018 and a compliance return also requires filing by that date. Where a plan has ceased then a “closure event” needs to be reported and a final return filed
For new share arrangements for 2017/18:
You will therefore need to
- Register the share scheme or arrangements online
- Self-certify certain share schemes online Share Incentive Plans (“SIPs”), Company Share Option Plans (“CSOP”) and Save As You Earn (“SAYE”);
- and file annual returns online.
Please note that Enterprise Management Incentives (“EMI”) option grants also have to be notified online within 92 days of the date of grant in order to qualify.
To register your share scheme or arrangement, you will first need access to HMRC Online Services and PAYE for Employers and it can take anything between 7 to 10 days to obtain login details which are supplied by H M Revenue & Customs by post. Once the scheme or arrangement is registered, a reference number will be issued online, you will need this before you are able to submit an annual return. You should allow a minimum of 24 to 48 hours for a reference number to be issued. Registration of new share schemes or arrangements should therefore take place well before the 6 July 2018 deadline as registering the plan on the deadline day itself will result in a late filing.
Additional time needs to be built in to the process if you are appointing an agent (or a new agent) to act for you, eg. Murray Harcourt as there is a separate agent authorisation process to complete. Neither you, nor an agent acting for you can file an annual return until the registration process has been completed. A first registration plus agent appointment can take anything between 4 to 6 weeks to set up.
Why you should act now
Even though you will need to report online, the process is dependent upon authorisation codes sent by post. HMRC will send this information to the address shown in its records for the company for UK PAYE purposes. You should check now that HMRC holds the correct information.
If you have outsourced your payroll there may currently only be a payroll agent PAYE access set up. If so you will need to contact HMRC to set up separate employer PAYE access to enable you to report share schemes or arrangements. If you think you may need to request a new login you should contact HMRC as soon as possible as it is likely to take several weeks for you to gain access to share schemes reporting online. An agent cannot register a plan or enter a plan termination event. Only the company login can provide this.
Automatic penalties apply for late filing and incorrectly completed returns:
- 7 July 2018 – 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.
We will be pleased to provide guidance and assistance as to both the registration process and annual filing requirements, please contact us or call your usual contact at Murray Harcourt on 0113 231 4131.