Companies must file an annual return with HMRC reporting any share or share option activity involving UK employees and directors. The submission deadline for the return for the 2022/23 tax year is Thursday 6th July 2023.
The return must be submitted online via the company’s Government Gateway portal, following a one-time registration of the share scheme under the ‘Employment-Related Securities (ERS)’ area. Companies filing for the first time are advised to register their scheme well in advance of the deadline, as it can take several days for the registration to complete before the return can be submitted, and longer if access to PAYE Online Services needs to be obtained first. Only companies will be able to complete the registration step; agents cannot do so with agent access.
A return must be submitted for each share scheme registered with HMRC. The return templates, which contain some modifications since last year, can be accessed here, and companies must select the correct return for each of their schemes. Non tax-advantaged share options/awards must be reported on the return template named “Other”, and tax-advantaged EMI, CSOP, SAYE or SIP entitlements/events must be reported on the relevant scheme return.
Tax-advantaged CSOPs, SAYE plans and SIPs
When registering a CSOP, SAYE plan or SIP, the registration process requires the company to make a declaration self-certifying that the scheme meets the legislative requirements. This step is essential for the plan to qualify for its tax-advantages. Any company that implemented a new CSOP, SAYE plan or SIP in the tax year must therefore carry out this registration and declaration by 6th July following the end of that tax year to secure the tax advantages for the grants made – and in practice, in time to enable the filing of the annual return for that tax year.
What needs to be reported?
- EMI options
The EMI scheme return requires reporting of any exercises, lapses, cancellations, releases, adjustments and replacements of EMI options. However it does not require EMI option grants to be included (which should have been notified to HMRC separately, within 92 days of the grant).
- Other share options/awards and shares
Grants of share options and conditional share awards (or ‘restricted stock units (RSUs)’) must be reported where these amount to rights to acquire shares. This includes any replacement (rollover) grants.
Acquisitions of shares (or other securities), including share option exercises, conditional share award or RSU award vestings, restricted share grants, direct share purchases and free share grants, and certain other share/security-related activity (such as the cancellation of options/awards for cash or other consideration, taxable events arising on restricted shares and the receipt of benefits in connection with rights to acquire shares) are also generally required to be reported.
The return for non-tax advantaged schemes (i.e. “Other” schemes) can be reviewed here.
The returns for tax-advantaged CSOPs, SAYE plans and SIPs contain bespoke reporting requirements, and these can be accessed here.
- No reportable events
If there are no events to report for the tax year, but an online scheme registration remains open following previous share award activity, the company is required to submit a nil return.
HMRC’s guidance on how to complete and file the returns can be found here.
It is worth noting that the templates are very sensitive to formatting changes and all data must be entered in a particular way. Any errors in formatting will be picked up by HMRC’s automatic file checking service upon upload of the completed template, and it will not be possible to submit the return until any formatting errors are corrected.
Although the issuing entity and, if different, the employer are jointly responsible for making the submission, in practice the entity that registered the return using its Government Gateway log-in will need to carry this out. Companies may need to factor in time to track this log-in down internally.
An automatic penalty will be issued if a return is not filed by 6th July, with further penalties arising if the return remains outstanding. Companies will not receive a filing reminder from HMRC.
We can help
If you have any queries on the reporting requirements or would like any help with completing your annual return, please contact Kathy Granby.