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Annual UK Share Plan Filings due by July 2022

24 May 2022 | Alasdair Friend

The UK tax authorities’ (HMRC) submission deadline for annual return filings in relation to employment-related securities for the 2021/22 tax year is midnight on 6 July 2022.

REMIND YOUR CLIENTS
You may wish to alert your clients to this deadline. We have summarised details of the filing obligation below, which you are welcome to adapt to alert your clients to the deadline.

HOW WE CAN HELP?

We provide advice and assistance in relation to all aspects of the annual reporting requirements and are happy to help your clients. Either you can be our client, or we can have a direct relationship with your client. Either way, as usual, we will not act for them on any other matters or market to them without your permission.

For further information please contact Alasdair Friend, Partner (Compensation & Benefits) on +44 203 051 5711, or email us. Feel free to use or adapt this reminder wording to alert your clients to the deadline:

[Your greeting]

I am writing to let you know about the upcoming reporting deadline for UK Share plans.

What needs to be done and by when?

  • All companies which award share incentives (options, restricted stock, long-term incentives, etc.) to their employees in the UK must file an annual share plan return with HMRC following the end of the tax year.
  • The deadline for the 2021/22 tax year return (which ended on 5th April 2022) is 6th July 2022.

What are the filing requirements?

  • The annual share plan returns must be filed online, as part of the company’s PAYE online processes, via the HMRC Employment Related Securities (ERS) online service.
  • In order to be able to file the returns, companies must have registered their share plans with HMRC. Where a company operates tax-advantaged share plans in the UK, it must register each tax-advantaged plan separately, and self-certify that those plans satisfy the conditions for favourable tax treatment. All non-tax advantaged plans operated by a company can be registered under a single registration number.
  • Where a company has previously registered a share plan, it must complete a ‘nil return’ if no reportable events (grants, exercises, vestings, etc.) have occurred during the tax year.

What are the risks?

  • There are penalties for late filing of returns, or failure to file a ‘nil return’. It is therefore important to start making the necessary preparations for annual returns compliance and we can help.
I hope this is helpful.

Do give me a call or drop me an email and we can discuss how we can help you.”

WHAT TO KEEP IN MIND

Scope of the reporting requirements
The ERS reporting requirements apply to any share options, shares and other types of security that are acquired by UK employees by reason of their employment. It can therefore apply to stock options and other kinds of share incentives that are granted by non-UK companies to UK based employees. Reporting may also be required in respect of non-UK resident employees who carry out work duties in the UK.

Online registration

Each ERS plan or arrangement should be registered online, however non-tax advantaged plans or arrangements do not need to be registered until there is a reportable event.

Self-certification of UK tax advantaged plans

Companies that operate tax advantaged ERS plans, such as Share Incentive Plans (SIPs), Savings Related Share option plans (SAYE) and Company Share Option Plans (CSOPs) must self-certify online that the plan complies with the relevant statutory code. The company secretary (or another person authorised to make the filing for the grantor company or UK subsidiary) should complete an online form declaring certain requirements have been met at the date of registration or from when the first option or award was granted.

Annual Online Filings

An online filing must be completed for each registered ERS plan or arrangement by July 6th following the end of the tax year. The returns will contain details of any stock options that have been granted and exercised, as well as any other reportable events in relation to employment-related securities.

Penalties

If filings are made after the deadline (6 July 2022), penalties may be imposed, and any tax advantages from a tax-advantaged plan for employers and employees may be lost. It is therefore important to start making the necessary preparations for annual filings compliance.

Annual UK Share Plan Reporting – How to prepare and the top 5 admin errors identified by HMRC

Disclaimer

Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.

Circular 230 disclosure

To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

The author

Alasdair Friend
Partner
Compensation and Benefits
International Assignments
D: +44 (0) 207 036 8385
T: +44 (0) 203 051 5711
F: +44 (0) 203 051 5712

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