If you had an employee share plan or arrangement in the 2022/23 tax year, now is the time to start thinking about your annual reporting obligations.
Share plan annual returns need to be filed online by 6 July 2023 in respect of all your share incentive arrangements to avoid penalties (an initial penalty of £100 will be due if a return is just one day late). Although we always recommend that you prepare and file your returns as soon as possible (as the filing process can be time-consuming and tricky to navigate) it is particularly important this year as HMRC have made some changes to their online templates. Although most of these are minor, if you prepare your own versions of the templates, it is important that you incorporate all the amendments (including changes to headings) as failure to do so could cause your annual return to be rejected and lead to late filing penalties. For example, if an employee doesn't have a National Insurance number it is no longer possible to simply leave the relevant column blank. Instead, you must populate it with a reference generated using a formula specified in HMRC's guidance. For more information on the changes to the templates please see the link below:
Employment Related Securities Bulletin 47 (January 2023) - GOV.UK (www.gov.uk)
Points to Note:
You need to make a return in respect of all your share plans and arrangements (tax-advantaged and non tax-advantaged) whether or not they were put in place with a formal set of plan rules.
Don't wait for a reminder from HMRC - they won't send one!
Before you can make an annual return, your share incentive arrangement or plan must be registered with HMRC under the ERS online service (part of the HMRC PAYE online service - if you don't already have access to this service, you can register for it here HMRC services: sign in or register: Register for HMRC online services - GOV.UK (www.gov.uk)).
To check whether an arrangement or plan is already registered, go to the "view" tab in your ERS online account (through your PAYE online portal) to see all the arrangements registered under your PAYE reference number (note that all your non tax-advantaged arrangements and plans can be registered under a single reference number). If you operate an EMI plan, it is important that you continue to notify HMRC within 92 days of granting EMI options. You might be aware of the government's intention to bring this obligation in line with the annual return deadline for EMI and other plans but this won't take effect until 6 April 2024. It is always important to take a screen shot of the notification process.
You must submit a return every year even if there has been no activity (for example, no new grants) during that period (in such circumstances you must file a "nil" return). You can download and complete the relevant annual return template online which can be located here. (Employment related securities return templates and forms - GOV.UK (www.gov.uk))
For more information about the process for registering your share plans click here (Tell HMRC about your employment related securities (ERS) schemes - GOV.UK (www.gov.uk)). For information about submitting your returns click here. (Submit your employment related securities (ERS) return - GOV.UK (www.gov.uk))
Sometimes the sale of shares or securities by your employees and directors and the cancellation or exchange of awards may also need reporting. Take advice if you aren't sure as HMRC can charge a penalty of up to £5,000 if a return contains a material inaccuracy.
We can help!
Dealing with your returns can be complex and time-consuming. We can help take away the pain of the process by:
- Working with you through the whole annual return process;
- Reviewing your completed returns before you file them; and
- Answering your specific queries about completing and/or filing your returns.
Originally published 02 May 2023
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.