Employers need to be aware and prepared for the additional UK compliance burden that now exists in relation to annual returns in respect of the above.
Employers have always been required to make a return to HMRC of all shares or options either granted or awarded to their employees as part of their compensation package. This obligation is in respect of such “reportable” events.
In any award of shares or options made to employees is a “reportable” event for UK tax purposes and must be reported to HMRC annually irrespective of whether there is any immediate UK PAYE/NIC liability arising from the award. It also makes no difference whether the shares/options are awarded under a previously HMRC “approved” tax advantaged scheme or not.
HMRC have, in previous years, taken a relatively relaxed approach to the pursuit of submission of these annual returns.
A new online filing requirement has been introduced for the UK tax years 2014/15 onwards with tough new penalties for failure to provide this information. In summary:
- Employers must now make an annual online return of such “reportable” events by the 6 July following the tax year in which the award of shares or options occurred;
- Returns for the 2014/15 tax year submitted after the 6 July deadline will be subject to an initial automatic penalty of £100 for late submission;
- In cases of continued non submission an additional penalty of £300 will be levied where the return is three months late and a further £300 where the failure continues after six months;
- A further penalty is chargeable of £10 per day if the failure continues after 6 months; and
- HMRC may also levy a penalty of up to £5,000 where the returns are incorrect.
It is therefore vital that employers contact us as soon as awards of shares or grants of options are made to employees. This needs to be done in any case to ascertain whether there are any immediate PAYE/NIC implications.
If you currently award your employees shares or are thinking of doing so remember to take into consideration the reporting of such benefits, here at Briars we are able to support you.