This alert only applies to companies with UK resident employees or directors who have been granted options or share awards. The UK annual share plan returns for the 2013/2014 tax year must be filed with HM Revenue & Customs (HMRC) before 6 July 2014 (for EMI and non-qualifying plans) or 7 July 2014 (for SIP, SAYE and CSOP plans). Significant penalties can apply if the returns are not filed in time.
HMRC requires that companies report the grant and exercise of non-qualifying securities options and the acquisition and disposal of other employment related securities and other reportable events on Form 42. Form 42 for the 2013/2014 tax year can be found here.
Guidance on completing Form 42 can also be found here.
Each qualifying plan has a specific return form.
- Company Share Option Plans (Form 35)
- Save as You Earn Plans (Form 34)
- Share Incentive Plan (Form 39)
- Enterprise Management Incentive Options (Form 40)
There is no requirement to report the grant of EMI options on Form 40 but even if only grants have taken place the forms needs to be returned showing no activity for the year. Please also note the changes to EMI1 notice of grant filing procedure, outlined below, with effect from 6 April 2014.
Collect information now
It is important that companies start collecting the information required in order to complete the relevant return(s) so that they are filed with HMRC in a timely and accurate way.
Registration requirements for qualifying and non-qualifying plans
The new HMRC Employment Related Securities online service for registration and self-certification of employee share schemes and arrangements goes live from 6 April 2014.
All employment related securities plans (both tax advantaged and non-tax advantaged) must be registered by 6 July 2015 at the latest. Failure to meet this deadline means you risk either losing tax advantages (including for current plans) or being unable to file your end of year return on time and then incurring penalties.
HMRC have suggested a timetable for registration (shown below), but you can choose to register at any time.
Click here to view table.
Changes to EMI1 notice of grant
From 6 April 2014, HMRC will no longer accept paper copies of the EMI1 notice of grant form. These forms must still be completed but should be retained by the employer. Companies granting EMI options will need to register the plan and file a notification online within 92 days of grant. This will be done via HMRC's Employment Related Securities online service, which is accessible through the PAYE Online for Employers service. If you are not already registered for HMRC's online services, you will need to do so to comply with this requirement. HMRC will not accept online notifications unless the plan has been registered.Changes to EMI1 notice of grant
Changes to filing of annual share plan returns from 2014/15
We will send an alert dealing with these specific changes closer to the time, but companies should note that 2013/14 will be the last year in which HMRC will accept paper annual share plan returns for qualifying and non-qualifying plans. From tax year 2014/15 onwards (i.e. for the filing deadline in July 2015) these returns will need to be filed online.