Employee Share Plan Reporting 2024: Alerting Your Clients

20 May 2024 | Alasdair Friend

The UK tax authorities’ (HMRC) submission deadline for annual return filings concerning employment-related securities for the 2023/24 tax year is midnight on 6 July 2024.

You may wish to alert your clients to this deadline and to the changes to reporting in 2024. You are welcome to adapt the content below to share with your clients. You can also view our article notifying corporate businesses of this deadline here.

We provide advice and assistance for 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. Find out more about our Corridor® offering here.

 

[Your greeting]

I am writing to let you know about the upcoming reporting deadline for UK Share plans and the changes to reporting requirements in 2024.

 

Share plan reporting deadline

  • All employers 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 2023/24 tax year return (which ended on 5th April 2024) is 6th July 2024.

 

Summary

  • The annual share plan returns must be filed online, as part of the employer’s PAYE online processes, via the HMRC Employment Related Securities (ERS) online service.
  • In order to be able to file the returns, employers 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 an employer 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.

 

Share plan reporting checklist

  • Register all new share plans, schemes or arrangements on the HMRC online platform.
  • If necessary, file a separate registration for one-off arrangements.
  • Submit the relevant annual online return for each plan registered on the HMRC system.
  • If there have been no reportable events in the reporting period, submit a nil return for all open tax-advantaged and non-tax advantaged plans.

 

New share plan registrations

Employers that have implemented new share plans will need to register the new share plans. Employers that have completed a corporate transaction involving the issue of new equity, rolled equity or loan notes will also need to register a new arrangement if the new rights granted or securities issued are not covered by an existing registration.

The employer must complete the plan registration on the HMRC system. Agents can provide support and assistance but cannot register plans on the HMRC system.

Once the share plan is registered, the employer will be provided with a unique reference number that is used to submit the annual return.

Employers should be aware that the tax benefits available for tax-advantaged share plans only apply where the relevant plan has been registered and self-certified.

 

Filing the annual share plan return

Step 1 – Agent Authorisation

Employers need to provide their nominated agent with their PAYE reference and accounts office reference number in order for the agent to request a code from HMRC.

HMRC will then send an authorization code to the employer’s registered PAYE address by post.

The employer should then provide the agent with this code so they can gain access to the HMRC system.

This process can take up to four weeks, so it is very important that the employer starts this process early.

Step 2 – Plan Registration

Once agent authorisation has been completed, the authorised agent can submit the return on behalf of the employer (returns can be submitted from the 6th April 2024).

The employer should provide their agent with information on all awards of rights to acquire shares, all acquisition of shares, and all relevant vestings of awards in the previous tax year.

 

Common errors to avoid

Failing to include non-UK-based employees

Employees who are non-UK based but have carried out duties in the UK during the period of award should be included in the filing.

Failing to include non-executive directors

Non-executive directors should be included in the ‘other’ return for non-tax advantaged plans.

Duplication or the incorrect registration of schemes

If you’ve already registered a scheme, you should select ‘view scheme arrangements’. A common error is selecting ‘register a scheme or arrangement’, which causes duplication of the same scheme and can lead to unnecessary penalties.

Not filing in good time and failing to file nil returns

Even if there has been no share plan activity or ‘reportable events’ during the tax year 2023/2024 you must file a nil return. Failure to do so could result in penalties. The deadline for reporting Annual UK Share Plan filings is 6th July 2024.

Failing to correctly cease a scheme

To cease a scheme, select ‘view schemes and arrangements’, then select the relevant scheme and choose the option ‘End of year returns’. You must then select ‘provide a final date of event’ and enter the date. This can only be completed by the company and not an ERS agent.

ERS online access and uploading templates

Any alterations to the template, including formatting changes, deleting columns or tabs will prevent you from being able to upload the template to the gateway. You will receive an error message if this is the case.

 

Penalties for late filing

If returns are filed after the deadline (6 July 2024), 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 returns compliance.

Filed after 6th July 2024

£100 penalty for each outstanding return.

Filed 3 months after the 6th July 2024

£300 additional penalty for each outstanding return (total of £400 per return).

Filed 6 months after the 6th July 2024

£300 additional penalty for each outstanding return (total of £700 per return).

Filed 9 months after the 6th July 2024

£10 additional penalty per day for each outstanding return.

 

How we can help you to help your clients

We can provide advice and assistance in relation to all aspects of the annual reporting requirements and are happy to help your clients. We can assist you as our client or work with your clients directly to enable a seamless reporting process including:

  • Practical support with registrations;
  • Help with self-certification of tax-advantaged plans;
  • A review of your client’s current reporting processes and how to format your report correctly to comply with the HMRC system;
  • Preparation and return of all filings;
  • Expert advice on tax treatments and administration of all share plans; and
  • Assessment and advice on data protection compliance concerning share plan reporting.

For further information on how we can help please get in touch.

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.

Related content

13 June 2024
How to apply for certificate of residence in the UK
Where an individual is resident in the UK and has…
29 May 2024
UK Share Plan Reporting 2024: Everything you need to know
The deadline is approaching for the HMRC’s annual return filings…
24 April 2024
The Beginner’s Guide to Global Mobility
We find that clients tend to ask the same initial…
Subscribe to our newsletter
Stay up to the minute on our latest news and insights?
International reach

We have helped clients meet their HR needs in over 70 countries across five continents.