Her Majesty’s Revenue & Customs (HMRC) has recently issued an Employment Related Securities Bulletin (the Bulletin). HMRC bulletins provide information and updates on employment related securities matters, including UK tax-advantaged employee share plans. The full Bulletin can be viewed here.
The latest Bulletin is HMRC’s 25th and it covers various issues that HMRC wants to bring to the attention of companies registering share plans on the Employment Related Securities (ERS) online service. Registration through the ERS online service became obligatory for all share plans operating in the UK from 2014 onwards. The Bulletin covers:
Common mistakes in newly registered share plans:
- Incorrect plan type selected: when registering a share plan, a company must choose a ‘plan type’ from a specified list. HMRC explains that it is still finding many new registrations showing an incorrect plan type, in particular companies seem to incorrectly identify Company Share Option Plans (a particular type of UK tax-advantaged plan) as non-tax-advantaged arrangements. HMRC provides guidance in the Bulletin on how to identify plan types.
- Errors in tax advantaged plans: the Bulletin identifies common mistakes in the documentation for CSOPs and SAYE plans, which should be corrected within the statutory time limits.
How to close a registration for an incorrectly registered plan via the ERS online service (note that an annual return will be required for any plan registration open for any part of a tax year).
- How often plans should be registered.
- How to register a tax advantaged plan late.
- The consequence of an incorrect, late or failed registration of a tax-advantaged plan.
Although the ERS online service aims to simplify and speed up the process for employers when creating new share plans and reporting in relation to those plans, it is vital that the registration process is followed correctly and, in respect of tax-advantaged plans, that the documentation accurately reflects the legislative requirements. Failure to comply could result in fines and/or the loss of tax benefits for employers and employees. Please let us know if you have any questions or concerns with the registration process or if you would like us to review your rules to ensure they are free of the errors identified in the Bulletin.
If you have any questions, please do get in touch – we are always delighted to help!
Hannah and Sharon