A new registration and filing regime for share plans came into force on 6 April 2014. In summary:
- All companies that grant share options or other share incentives to their UK employees will need to register their plans with the UK Tax Authorities (‘HMRC’) by 6 July 2015
- Tax-advantaged plans will have to be self-certified as meeting the relevant requirements and there is a new enquiry and penalty regime
- From 6 April 2014, all EMI option grants have to be notified to HMRC online
- Annual share plan filing to move online for the 2014-15 tax year
The changes should make it easier for companies to operate share plans in the UK. Further information on the new regime is set out below.
What is the registration process?
The new online registration process applies to all share plans involving UK employees, both tax-advantaged and non tax-advantaged. Registration is necessary in order to facilitate the annual online filing for the 2014-15 tax year, and therefore any plan in respect of which there will be a reportable event for that year will need to be registered by 6 July 2015.
What is self-certification?
The new self-certification regime will apply to tax advantaged CSOPs, SIPs and SAYE plans. These plans will no longer require specific approval from HMRC. Instead, companies operating such plans will need to make a declaration that the plan meets the relevant legislative requirements. Plans already in existence at 6th April 2014 will need to be self-certified by 6th July 2015, and new plans by the 6th July in the tax year following that in which the plan was first operated. EMI options are not subject to the same self-certification regime but from 6 April 2014 all new EMI option grants will need to be notified to HMRC online.
There is also a new enquiry and penalty regime so that HMRC can ensure that tax-advantaged plans are being operated correctly. However, HMRC has confirmed that if a plan was previously approved by HMRC before 6th April 2014, it will not raise enquiries into whether the plan satisfies the legislative requirements.
What are the annual return filing requirements?
Companies that operate share based incentive plans for their UK employees are required to file an annual return by 6 July after the end of the relevant tax year. For the 2014-15 tax year and thereafter, annual returns will need to be filed online.
What should companies be doing?
As most of the changes (except in relation to EMI notifications) do not come into effect until 2015, companies will have plenty of time to take the necessary actions. The key actions for companies will be:
- ensuring that the company is registered for PAYE online and has access to the employment-related securities service
- registering any relevant plans with HMRC sufficiently in advance of 6 July 2015 to enable the online annual reporting
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