Employee share plans: key dates for your diary

If you are running an employee share plan or employee ownership arrangement, there are some key dates that should be in your diary every year to be sure your plan is compliant with various HMRC rules.  In addition, this year there are some changes to capital gains tax (CGT) and dividend allowances that may impact on share plan participants. 

Trust and estate tax returns

If your employee share plan includes an Employee Benefit Trust (EBT), you will likely need to file a trust and estates tax return for the trust by 31 January 2024.  Your EBT, and if you are employee owned using an Employee Ownership Trust (EOT) should be registered with HMRC using the Trust Registration Service (TRS).  A Share Incentive Plan (SIP) Trust does not automatically need to be registered, unless it becomes liable for tax.

Changes to schemes for non-employees 

Financial services regulations contain particular exemptions for employee share plans. However, if you’re extending equity compensation to people who aren’t employees – eg consultants – those exemptions won’t apply, and you need to follow different rules.  From 31 January 2024, there will be some changes to these rules, in particular relating to exemptions for promotions to certified high net worth investors and self-certified sophisticated investors.  If you’re offering equity incentives to anyone who isn’t an employee, make sure you are aware of the rules so that you don’t inadvertently get into trouble with the Financial Conduct Authority. 

Enterprise Management Incentives notifications

From 6 April 2024, there will no longer be a requirement to notify HMRC of the grant of EMI options within 92 days of the date of grant.  Instead, the notification deadline will be extended to 6 July following the end of the tax year in which the option was granted (i.e. the same deadline as the share plan annual return).    However, if you grant EMI options  before 6 April 2024, you must still follow the current EMI notification process within the 92 day deadline, or the EMI options will not qualify.

CGT changes 

Also from 6 April 2024, the annual exemption for CGT is to be reduced to £3,000 (from £6,000 in 2023/24).  This may impact on employee share plan participants who sell their shares and make a capital gain, including on an exit event such as a sale of the company.  Remember that SIP shares will remain entirely free of CGT for as long as the shares are held in the SIP trust.  

Dividend tax changes 

From 6 April 2024, the annual tax-free dividend allowance for the tax year 2024/25 will be reduced to £500 (£1,000 in 2023/24).  If your employee share plan participants receive dividends in excess of that amount, they will be subject to tax on the excess and be required to complete a self assessment tax return.

Share plan annual returns

You must file an annual return for each of your employee share plans for the 2022/2023 tax year on or before 6 July 2024 using HMRC’s online Employment Related Securities portal.  This applies even if there has been no activity in the scheme – if that’s the case, you must file a nil return.  If you don’t file on time, you will be subject to fines

In addition, two important share plan consultations were launched last year, one looking at all employee tax advantaged schemes, including SIP, and one looking at EOTs and EBTs.  If government acts on these, there may be extra changes you’ll need to know about.  

Check the points above to make sure you’re in control of your share plan arrangements.  If you’re in any doubt, get in touch with our compliance team to get specialist support on all share plan administration matters on enquiries@rm2.co.uk.