May 2017: UK: Tax 2017 – Share Plan Returns Update

It’s nearly time to file your UK annual share plan returns for the 2016/17 tax year. These must be submitted by 6 July 2017 – that deadline is fast approaching!  Remember that a nil return is generally required even where there has been no activity.  We strongly recommend that you take action now and have set out some updates for this year’s filings below.

Online service outage

Some companies file early so we wanted to alert you to the partial service outage of HMRC’s Employment-Related Securities (ERS) Online Services, which is currently affecting plan returns submissions. HMRC have advised that they expect to have fixed the problem by 22 May 2017. Here is a list of what is known to be affected/not affected currently:

Tapestry comment:
You should plan to file your return ahead of the last date of 6 July 2017, in case the online platform has further issues.

In case it is helpful, we have provided some background to the UK’s relatively new online annual return filing arrangements below, as well as some updates in respect of this year’s filing. Please contact us if you would like our assistance with your filings.

Why is it important to file on time?

  • Financial penalties automatically apply if you fail to register (and, where applicable, self-certify) your share plans by the 6 July 2017 deadline.
  • Financial penalties automatically apply if you fail to correctly file your annual share plan returns by the 6 July 2017 deadline, even if no reportable events occurred in the 2016/17 tax year.
  • New UK tax advantaged plans will lose their tax status if you fail to register and self-certify them by the 6 July 2017 deadline.  This means that awards granted under new share incentive plans (SIPs), save-as-you-earn plans (SAYE or sharesave plans) and company share option plans (CSOPs) on or after 6 April 2016 will not be tax advantaged.
What are annual share plan returns?
A few years ago, HM Revenue & Customs (HMRC) swept away paper filings and introduced online registration and filing requirements for share plans that operate in the UK.  For UK tax advantaged share plans, an additional ‘self-certification’ requirement was imposed, replacing the previous process of seeking HMRC approval for such plans.As a result, ‘reportable events’ (such as grants, vesting, exercises, lapses, adjustments, rollover and cancellation) must be reported to HMRC by 6 July following the tax year in which the event takes place.  In most cases, a nil return must be submitted even if no reportable events have occurred.  For UK tax advantaged share plans, you will also need to disclose any amendments to “key features” of those plans and confirm that the amendments are in line with the relevant UK tax legislation.
Tapestry comment:
If you are unsure whether or not something is a reportable event or a change to a “key feature”, please do contact us for clarification.
How do I make an annual share plan return?You can make an annual share plan return using the templates online through ERS Online Services, which is accessible via HMRC’s PAYE Online Services.  Before you can submit your annual share plan return for the 2016/17 tax year, you must register the relevant share plan.  SIPs, SAYE plans and CSOPs must also be self-certified as compliant with the relevant UK tax legislation. You will likely have registered and, as relevant, have self-certified all your share plans in previous years and so this process should only need repeating for new plans in the 2016/17 tax year (or for non-tax advantaged plans that were inactive until the 2016/17 tax year).

Tapestry comment:
If you are registering new plans (or previously inactive non-tax advantaged plans), there are a number of steps along the way that could lead to potential delays in submission. As such, we strongly recommend that you begin the registration/self-certification process as soon as possible and we would, of course, be happy to help you. Note that there are different requirements and deadlines for UK tax favoured enterprise management incentive option schemes (EMI plans) so please get in touch if you operate, or are intending to operate, an EMI plan.

Is there anything new I should know for this year’s filing?

  • New templates: The templates do not seem to have changed since last year, save for a very slight change in the formatting of one of the columns in the non-tax advantaged template. Nevertheless, we recommend freshly downloading the most recent templates here.
  • Wrong template names: You may notice that the file names for the templates still have “2015/6” in the title – this is because the files have not been renamed since last year. Despite this, HMRC have confirmed that the templates are the most up-to-date versions and should still be used.
  • No staged filing: Unlike last year, HMRC is not using a staged filing process for different returns. You should be able to file any type of annual return straight away (subject to the server outage being fixed).
  • Beware server overload! In the past, many companies have left the submission of their annual share plan returns (and related registrations/self-certification) until the last minute and this has caused HMRC’s server to become overloaded.  Previously, HMRC has extended the filing deadline in such circumstances so that ineffective and/or late submissions (and registrations/self-certification) did not automatically trigger financial penalties and the tax consequences detailed above.  Whilst HMRC has shown this leniency in the past, it cannot be guaranteed to do so again and we therefore strongly recommend that you complete and file your annual share plan returns (and, if needed, register/self-certify your plans) well in advance of the 6 July 2017 deadline to reduce the chance of them being submitted late.
Tapestry comment:
If you would like our help in preparing your annual share plan filing, or have any other queries regarding your 2017 annual share plan returns, please do contact us as soon as possible. We would be delighted to help!
Sarah and Emma
   

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