Employee share schemes self-certification and online filing

28th March 2014

Last year, it was announced that all filing of HMRC returns relating to employee share schemes should in the future be made online, and that the approval process for tax-advantaged employee shares schemes would be replaced by a self-certification procedure. Now that we are approaching the implementation dates for these changes, this briefing paper seeks to remind our readers of the nature of the changes and the timetable for their introduction.

Tax-advantaged schemes

  • From 6 April 2014, new tax-advantaged schemes (SAYE option schemes, share incentive plans (SIPs) and company share option plans (CSOP)) can be introduced without prior HMRC approval. Instead, companies must register the adoption of the relevant scheme with HMRC, and “self-certify” (by 6 July following the tax year in which the scheme is operated for the first time) that the scheme meets the relevant statutory requirements.
  • From 6 April 2014, a company which operates an existing tax-advantaged scheme must “self-certify” that the scheme has met, and continues to meet, the relevant statutory requirements. This applies even where the scheme has previously been approved by HMRC. The self-certification must be provided to HMRC by 6 July 2015.
  • Annual returns must be submitted online to HMRC for tax year ending 5 April 2015 and all following tax years. Thus, the first online annual returns must be submitted by 6 July 2015.

Enterprise Management Incentives (EMI)

  • A company which operates an EMI scheme must register it with HMRC by 6 July 2015.
  • Notification of the grant of EMI options must be made online from 6 April 2014, instead of on paper Form EMI1.  Important note: It appears that no paper EMI1 forms will be accepted by HMRC from that date, even in respect of options granted before that date.

Employee share schemes without tax advantages

  • A company which operates an employee share scheme which does not benefit from tax advantages must register it with HMRC by 6 July 2015.
  • An annual return for employee share schemes which do not benefit from tax advantages (known currently as Form 42) must be submitted online to HMRC for tax year ending 5 April 2015 and all following tax years. Thus, the first online annual returns must be submitted by 6 July 2015.

HMRC has been given powers to impose penalties for non-compliance, and to enquire into the operation of a stock plan.

These changes have significant implications for companies operating employee share schemes, especially those which are required to “self-certify” tax-advantaged schemes. We would be pleased to advise in relation to any areas of uncertainty which companies might experience.

We would also be happy to act as your agent for these purposes and to file annual returns and notification forms online on your behalf.  If you would like us to do so, please let us know. We can then notify HMRC, who will invite you to authorise us formally to act as agent on your behalf for these purposes.