Some employers are failing to correctly register their share scheme plans using HM Revenue and Custom’s (HMRC) new online services.
Examples of incorrect share scheme registrations, which must be done by 6 July or else schemes risk losing their tax advantages, include registering a plan under the wrong scheme type and also selecting the wrong ’tax year or first event’.
HMRC has made clear that it will enforce strict deadlines to save as you earn schemes (SAYE), share incentive plans (Sips) and enterprise management incentive schemes (EMI), which all have tax advantages.
Furthermore, if an existing share scheme plan is not registered then all awards or grants made in 2014/15 will lose their qualifying status and become subject to income tax on exercise of options.
The new rules governing registration and reporting were introduced from the 2014/15 tax year and onwards.
- All schemes approved before 6 April 2014 under the old regime must be registered by 6 July 2015.
- New schemes introduced on or after 6 April 2014 must be registered by 6 July following the tax year in which the first award of shares was made.
- The annual return must be completed by 6 July following the relevant tax year.
- A grant of EMI options must be notified within 92 days of the date of grant in order for the options to be qualifying options.
Employers getting this wrong could attract a penalty of up to £5,000 as well as the loss of the tax advantages.
HMRC has warned employers to act now as registering a scheme can take up to two weeks to process.
Phil Ainsley, managing director, employee services at Equiniti, said: “As this is so important, we would ask anyone who has already registered their share plans to go back and check that the details are recorded correctly.
“If a mistake has been made there is no simple way to rectify it and there is very little time left.
“Registration can take a couple of weeks so it needs to be completed and then checked as soon as possible and well in advance of the July deadline.”