5 June 2020
UK - Reminder to file share plan returns by 6 July
The date for filing your UK annual share plan returns for the 2019/20 tax year (which ended 5 April 2020) is fast approaching. The returns must be submitted by Monday 6 July 2020.
Given the unprecedented levels of disruption to businesses caused by the Covid-19 pandemic, we had anticipated that HMRC might consider extending the deadline or relaxing the reporting requirements, but such measures have not (as yet) materialised. We must therefore proceed on the basis that the 6 July deadline is not going to change. As the registration and reporting process can take some time, we strongly recommend that if you have not already done so, now is the time to prepare and file your share plan registrations and returns with HMRC.
Remember that a return is generally required, even where there has been no activity (in which case a nil return should be filed).
Service availability and downtime
In previous years, HMRC’s Employment Related Services (ERS) Online Services has been affected by outages which have impacted share plan return submissions. These issues have been particularly severe in the run up to the deadline day. HMRC has set up a web page (here) advising users about any current and planned issues with the ERS registration service. We may see similar issues this year with potentially reduced and delayed HMRC support due to pandemic-related resourcing problems. This increases the need to get the job done, now, rather than on deadline day!
Why is it important to register/file on time?
Failure to register and/or file on time has serious consequences:
- Financial penalties automatically apply if you fail to register your plans (and, for certain tax advantaged plans, self-certify that they are qualifying plans) by the deadline.
- Financial penalties automatically apply if you fail to correctly file your annual share plan returns by the deadline, even if no reportable events occurred in the 2019/20 tax year.
- Newly adopted UK tax advantaged plans will lose their tax status if you fail to register and self-certify them by the deadline, where awards have been granted in the 2019/20 tax year. This means that any awards granted under new share incentive plans (SIPs), save-as-you-earn plans (SAYE or Sharesave) and company share option plans (CSOPs) on or after 6 April 2019 will not be tax advantaged.
First, you must register your share plans…
Before you can submit your annual share plan return(s) for the 2019/20 tax year, all relevant share plans must have been previously registered online with HMRC. Any SIPs, SAYE plans and CSOPs must also be self-certified online as compliant with the relevant UK tax legislation. You will likely have registered and, as relevant, self-certified existing share plans in previous years. Registration should only be required in relation to new plans implemented in the 2019/20 tax year.
…next, make your annual share plan returns
To make your annual share plan returns, you will need the plan’s unique scheme reference number. This is provided by HMRC, typically within 10 days from when the plan is first registered.
The annual share plan return must then be made by using the online templates, available through HMRC Online Services and accessible via HMRC’s PAYE Online Services (here). The return template you use will depend on the plan you are reporting on. Non-tax advantaged plans must be reported on the “other” template, but there are specific templates for each of the UK tax advantaged plans.
If you are registering/self-certifying a plan, there are a number of steps in the registration/self-certification process which can delay submission of the related annual return for that plan. We recommend you begin the registration/self-certification process as soon as possible. We are, of course, always happy to help.
You may already operate one single registration (and submit one single filing) for all of your existing non-tax advantaged plans. If this is the case, you might not need to register new non-tax advantaged plans separately. You might simply be able to report relevant ‘reportable events’ for that plan in the filing for your existing non-tax advantaged registration. If you are unsure whether or not this applies to you, please do get in touch. However, note that all tax advantaged plans must be registered (and self certified) separately.
There are different (and significantly more onerous) requirements and deadlines for UK tax advantaged enterprise management incentive (EMI) option plans. Do please get in touch if you operate, or are intending to operate, an EMI plan.
Is there anything else I should know for this year’s filing?
- Terminated plans: If you no longer use a share plan, you still need to make an annual return in respect of any outstanding awards. Once all awards have ‘paid out’, you can stop filing but only after you have informed HMRC that the plan has terminated. Further information about ceasing a share plan registration is available here. Remember that timing is key to avoid additional nil returns.
- Templates: We recommend that you always download the most recent templates from the HMRC web site and avoid using previously downloaded templates. You should not alter the template in any way, e.g. by deleting tabs or columns, altering the format or changing its name. Altering the template will result in an error message and the gateway will not allow you to upload it.
- Template file names: The file names for the templates still have “2015/6” in the title because they have not been renamed since they were first made available by HMRC. However, the templates available online are the latest versions and HMRC has confirmed that the templates should continue to be used unchanged.
- Mistakes: HMRC has identified common mistakes in newly registered plans, including companies selecting the wrong plan type when registering a share plan, and errors in the tax advantaged plan documentation. In particular, remember that only UK tax advantaged plans are considered tax advantaged for the purposes of these registrations. Any plans that maybe tax advantaged outside the UK should be registered using the “other” template.
- Formatting errors: The template files are format sensitive and the HMRC checking service (here) allows companies to check for formatting errors prior to filing the completed templates. We recommend using this service to avoid delays in filing.
- Don’t leave it to the last day! We 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 2020 deadline to reduce the risk of late registration/filing. This is particularly the case where a new registration is required, because (as noted above) there are a few steps along the way that could cause delays in submission of the related annual return.
Although several other annual reporting style requirements have been delayed or cancelled for 2020, we are yet to hear of any such developments for the annual share plan filing. We will keep you updated if this situation changes but, for now, companies should be working to the 6 July deadline.
With the current coronavirus pandemic, it is easy to lose sight of your share plans and your annual filing requirements. If you would like our help in registering your plan(s) or preparing your annual share plan filing(s), and/or if you have any other queries regarding your 2020 annual share plan returns, please do contact us. We would be delighted to help!
Chris, Tom and Matthew