Many companies choose to attract, retain and incentives their employees (including directors) with share related benefits, which may include the provision of shares or share options. Where an individual receives share related benefits by virtue of their employment, or the employment of an associate, the shares or securities will be Employment Related Securities.
Do we need to complete a return?
Many companies choose to attract, retain and incentives their employees (including directors) with share related benefits, which may include the provision of shares or share options.
Where an individual receives share related benefits by virtue of their employment, or the employment of an associate, the shares or securities will be Employment Related Securities.
What is the filing deadline?
There is a strict deadline for the filing of any required returns, this being 6 July following the end of the tax year in which the “reportable event” occurred.
What happens if we file late?
HM Revenue and Customs will automatically charge late filing penalties where this filing obligation is not met. Penalties may also be levied for inaccurate returns.
What needs to be reported?
Matters to be reported annually (by 6 July) include, but are not limited to, the reporting of:
- Grant of options
- Exercise of options
- Lapses or cancellation of options
- Replacement of options
- Exchange of employment related securities
- Acquisition of shares/stocks/securities other than by option exercise
- Lifting of restrictions on previously acquired employment related securities shares/stock/securities
- Events that increase the value of the employment related securities.
An annual end return will also be required for any “open scheme” even where no reportable event has occurred during the relevant UK tax year.
Is the obligation for UK shares and securities only?
The reporting obligation is not restricted to Employment Related Securities in UK incorporated companies it also applies to employment related securities in an overseas entity where the shares/stock/securities are acquired by a UK tax resident individual, or an individual with UK duties.
Registration requirement before reporting
Shares schemes need to be registered on the HM Revenue & Custom portal before the end of year returns can be completed. This can take a few weeks and so it is important that the reporting company attends to this in good time to be able to meet the filing deadline and thus avoid penalties.
The above is a high-level summary of the end of tax year Employment Related Securities filing obligations. If you have any specific questions, require assistance with meeting your end of year filing obligation, or would like to discuss share related benefits for your employees, please do contact your regular Menzies relationship manager, or one of our Share Scheme specialists.
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