The UK system of pre-approval of tax-advantaged share plans has now come to an end.
All plans or arrangements relating to employment related securities, whether tax-advantaged or not, must now be registered with HMRC online. The deadline for registration is 6 July 2015, but action is needed now to ensure the all the registrations are completed in order to allow end of year reporting. It may take you a couple of weeks to register your arrangement so please act now.
The scope of registration is wide. For example, even a one-off share acquisition potentially needs to be registered to allow its inclusion in the employers' annual filing. A non-UK plan or arrangement will need to be registered if UK employees are included. Please contact us if you are not sure if filing is required.
Non-tax advantaged share plans must be registered. If they are not registered then it will not be possible to file the annual return and you may be liable to interest and penalties as a result.
Plans which have previously received HMRC approval must be registered and their compliance with legislation self-certified. Existing plans benefit from a grandfathering regime so that if a plan has been operated within the terms of its approval and no amendment has been made to a key feature of the plan then it may be self-certified as in accordance with legislation even if there is a provision in the plan which may not be strictly in accordance with current legislation (for example, if there was a concession made by HMRC).
New tax-advantaged plans will need to be registered and self-certified. Self-certification requires the plan organiser to confirm that the requirements of the relevant legislation have been met and (save for existing schemes where no changes have been made to key features) that the Purpose Test is met. The Purpose Test requires a confirmation that:
- The purpose of the plan is to provide benefits to employees in the form of share options (for CSOPs and SAYE) or shares (for SIPs).
- The plan must not provide benefits to employees otherwise than in accordance with the relevant legislation. In particular, the plan must not provide cash to employees as an alternative to shares.
If you do not register and self-certify then the tax-advantages available for SIP, SAYE and CSOP plans will not apply to awards or options granted after 6 April 2014.
If you have been delaying making online registrations, now is the time to act!