You will need to take the following actions by 6 July 2017:
- complete end of year reporting for share plans; and
- self-certify new tax-favoured share plans.
A failure to comply will result in automatic penalties and the withdrawal of tax-favoured treatment for some employee share options.
All new employee share plans and arrangements need to be registered online. Arrangements cover the acquisition of employment-related securities by employees and directors generally, not just under a formal plan.
Companies will also need to self-certify that any new tax-favoured share plans (EMI, CSOP, SIP and SAYE) meet certain requirements by 6 July 2017.
Reporting for tax-favoured plans and non tax-favoured plans and arrangements must take place by 6 July 2017. There will be automatic penalties for late filing after 6 July 2017. Reportable events include the grant of options, the exercise of options, certain lapses of options, the acquisition of shares and events under the restricted shares legislation and anti-avoidance rules.
Companies who registered a plan or arrangement last year but have no reportable events for the 2016/17 tax year must submit a ‘nil return’ to avoid automatic penalties arising for non-filing. For companies reporting events under a plan or arrangement registered last year, there is no need to re-register the plan or arrangement.
The automatic penalties will be applied as follows: immediate £100 penalty for filing after 7 July 2017; additional £300 if filing is 3 months late; additional £300 if filing is 6 months late; and £10 per day the filing remains outstanding if 9 months late. There is also a penalty of up to £5,000 for a material inaccuracy in a return which is not immediately addressed.
Next steps – start now – do not leave this until the last minute
If you have not used the HMRC online site for employment-related securities already, it can sometimes take over two weeks to register your plan or arrangement. The end of year reporting cannot take place until registration has happened so you do not want to leave it until the last minute. Where options are granted over shares in a non-UK company to employees of a UK subsidiary, it will be simpler for the UK subsidiary to be responsible for the online registration, self-certification and end of year reporting.
You can set up a new login by entering the Government Gateway site and registering. To register on the Government Gateway site you will need your PAYE reference number and Accounts Office reference. Please note that your activation code for this site will be sent through the post and may take seven days to arrive.
Once you have your activation code, the online system is accessed through HMRC’s online services. Once you have set up your account, you will need to register your share plans. This may take up to two weeks following your registration for HMRC to process and verify.