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In brief

Following the end of the UK tax year on April 5, 2021, annual share plan returns may now be filed online with HMRC. All companies with open share plan registrations with HMRC are required to submit an annual return, even if it is a nil return (i.e., even if there has been no share plan activity during the 2020/21 tax year). The deadline for submission is July 6, 2021. Please note that HMRC will not send companies a reminder to file their share plan returns.


In more detail 

An annual return needs to be submitted by July 6, 2021 for the 2020/21 tax year for each share plan that has been registered with HMRC online (unless it was de-registered in a previous tax year). The return will need to cover all reportable events that occurred between April 6, 2020 and April 5, 2021. Reportable events include:

  • For options – the grant (including on a rollover/assumption), exercise, assignment or release for consideration (not a lapse for nil consideration) or the receipt of a benefit in connection with the option
  • For Restricted Stock Units (RSUs)/conditional share awards – the grant, vesting, assignment or release for consideration (not a lapse for nil consideration) or the receipt of a benefit in connection with the award
  • The purchase of shares under share purchase plans (and potentially the grant of purchase rights)

The return needs to be filed by the entity that registered the plan with HMRC using the plan’s unique reference number. For those companies that do not regularly access HMRC’s website, now is the time to relocate those log-in details or identify the person who has access. The template forms and guidance on how to complete them can be found here. These remain the same as last year.

By way of reminder, non-tax advantaged awards and plans must be reported on the “other” template. There are separate templates for each of the tax advantaged CSOP, SAYE, EMI and SIP plans. If the template does not match the plan registration, the submission will be rejected.

Before submission, files uploaded to HMRC’s website will be checked for formatting errors by HMRC’s checking service. The files are format sensitive and so companies are encouraged to check their files in advance of making the submission. This can be done here.

The website that HMRC introduced to report on the service availability of HMRC’s website and any planned downtime, remains available. It can be accessed here.

HMRC Guidance

HMRC has noted that the most common errors on the share plan returns are:

  • Using drag and drop to fill in the template, which can increase numbers incrementally instead of copying. This can be problematic for PAYE references and addresses
  • Entering outdated or incorrect PAYE reference number
  • Not using pounds currency, which can lead to amounts appearing inflated

HMRC still see a significant number of companies forgetting to file returns or filing late returns. Companies should ensure that they have submitted a return for all open registrations. This includes any share plans that were registered by companies that were acquired during the tax year. For these registrations, you will need to locate the log-in details that match the original registration. If companies have any registrations that are no longer needed, you should consider de-registering to stop ongoing reporting requirements (and the risk of penalties for late filing). An annual return for the year of any final events will still need to be submitted.

For those companies that are operating share plans in the UK for the first time, they will need to register the share plan with HMRC before being able to submit the annual return. Registration is made through the “PAYE for Employers” section of HMRC’s website. Any new tax advantaged plan or sub-plan will need a separate registration.

Additionally, HMRC changed its guidance last year to confirm that it expects companies who use the net settlement withholding method with respect to their non-tax advantaged share plans to inform HMRC that they are doing so in their annual returns. For further information about how to report net settlement on your annual share plan return, please click here.

If you need any assistance with the preparation of your annual share plan return, please do not hesitate to contact a member of your Baker McKenzie team.

Additional Reminders

In addition to your annual share plan returns, the reporting and payment deadline for the special PAYE arrangement for Short-Term Business Visitors (STBVs) has, from April 2020, been extended from 19 April to 31 May following the end of the relevant tax year. However, due to the COVID-19 outbreak, HMRC has agreed to further extend the deadline for the 2020 to 2021 tax year returns and payment to 30 June 2021.

If you need any assistance with these filings, again please do not hesitate to contact a member of your Baker McKenzie team.

Author

Jeremy Edwards is a partner at Baker & McKenzie´s London office.

Author

Gillian Murdoch is an associate in Baker McKenzie's London office. Gill qualified in the employee benefits team in 2014 after joining the firm as a trainee in 2012. Gill was named as a "Next Generation Lawyer" by Legal 500 in 2017.

Author

Emma Louise Garthwaite is an Associate in Baker McKenzie's London office.