UK Share Plan Reporting - time to take action for UK based companies

1.6.2021

Now the 2020/21 tax year has ended, companies need to start thinking about their employment related securities (ERS) online share plan reporting obligations in the UK. Generally, employment related securities means share options/awards and any shares held by employees or directors. Companies need to register their share plans with HMRC, self-certify their tax advantaged arrangements, and file online annual returns setting out certain share plan related activities which occurred during the 2020/21 tax year by 6 July 2021.

It can be complex to get things right, particularly if you have any internationally mobile employees or have gone through a corporate transaction during the year. We can help you to be compliant across all aspects of the process.

Companies need to report a range of events but examples include any option grants or share awards made during the year and exercises of options or vesting of share awards. Specific annual returns need to be submitted for each of the tax-advantaged plans in the UK (namely CSOP, SIP, SAYE and EMI) in addition to any reporting requirements for non tax-advantaged arrangements. Please note, if there have been no reportable events for both tax-advantaged and non tax-advantaged plans you will still need to submit a nil return via HMRC's online system where a plan/return has previously been registered and/or submitted.

There have been no changes to the annual ERS return templates for 2020/21 tax year.  

Reminder if you net settle any share awards

As a reminder, if your company net settles any of its share awards additional reporting is required. Net settlement is the term commonly associated with the process where a company settles an employee share award partly in shares and partly in cash (with the cash amount often representing the associated tax withholding liability). HMRC issued guidance issued in October 2019 which explained how companies should report details of net settled share awards on the annual ERS returns. For most companies that net settle, this will result in a significantly more complex and time-consuming process when completing the annual share plan return.

What are the consequences if things go wrong?

• If you don’t register and self-certify your UK tax advantaged plans by the deadline then neither the company nor your employees will benefit from the tax advantages. 
  • Miss 6 July 2021 deadline – £100 penalty. 
  • No filing made by 6 October 2021 – £300 penalty. 
  • No filing made by 6 January 2022 – £300 penalty.
• Filing your ERS annual returns late will lead to automatic penalties for each plan or arrangement you’ve registered: 
• If no filing is made by 6 April 2022, HMRC may impose a penalty of £10 per day until the ERS annual return is submitted.
• It’s important to file on time, and to make sure that what you file is correct. HMRC can impose a fine of up to £5,000 for incorrect returns. 
• There are also reputational risks to consider if you fail to meet your reporting obligations    

If this is relevant for you, or you'd like to understand more, please let us know!