Employee share plan annual returns

The end of the tax year means that it’s time to make sure all your employee share plans information is up to date.  If you’ve got an employee share scheme, you’ll need to file a return on HMRC’s Employment Related Securities portal by 6 July 2023.  RM2’s share plans support team will be in touch with our clients to make sure we have everything in place in time for that deadline.  


Here’s a quick guide to what you need to do to avoid late filing penalties – and reduce the risk of HMRC showing an interest in your company’s tax affairs.  


What is an Employee Share Plan Return?

All employee share schemes need to be registered with HMRC.  This includes tax advantaged share plans such as Enterprise Management Incentive (EMI) schemes, Company Share Option Plans (CSOP), Share Incentive Plans (SIP) and Save As You Earn (SAYE) schemes; and non-tax advantaged arrangements including Growth Share Plans, Long Term Incentive Plans (LTIPs), and Non-Tax Advantaged Share Plans (NTAs).


Once your plan is registered, you’ll need to complete an employee share plan return every year.  You’ll need to tell HMRC about awards granted, lapsed and exercised.  This includes if options were exercised or shares sold as part of a company sale – in which case you may also need to let HMRC know that the scheme has been wound down.  If you’re running a tax advantaged plan you will need to confirm if any alterations have been made to key feature of a share plan. 


Even if there has been no activity relating to your share plan, you must still file a nil return to avoid a fine. 


What if I don’t file a return?

You will be fined if you don’t file in time.  The first penalty is £100 for failing to meet the 6th July deadline, then additional automatic penalties of £300 will be charged if the return is still outstanding on 6th October, and a further £300 if it’s still outstanding 6 months after that date. If a return is still outstanding 9 months after the 6th July, daily penalties of £10 a day may be charged.


In addition, HMRC are known to keep an eye on companies that don’t file returns – of whatever type – in a timely fashion.  They might see this as evidence of a failure to report other information – which might lead to enquiries or investigations from HMRC into other parts of your business. 


How do I make a filing?

You will need to upload the information onto the Employment Related Securities portal, using the login details that you used to register your plan.

You need to make sure that the information is uploaded in the right format, so it matches HMRC’s systems.  HMRC have made some changes to their templates this year (see our blog here), so make sure that you’re using the correct templates or you won’t be able to file your return.)


Why does HMRC need this information?

For two reasons. Firstly, HMRC are responsible for overseeing tax advantaged employee share plans, such as EMI share options. These cost the taxpayer several hundred million pounds in tax relief. HMRC is accountable to parliament for this.


Secondly, employee share plans have in the past been used by some companies to avoid tax. HMRC gathers information on employee share schemes to spot possible tax avoidance.


How can we help?

We are one of the few share schemes practices who can both design and implement your share plan, and also deal with your share plan annual returns for you.  The majority of our clients choose to engage us to administer their schemes after implementation. 


Each year, RM2 files well over 150 share plan returns for our clients – so you can be assured of our experience and expertise in this area.


If your share plan return is causing you stress and eating into your time, we can make it less of a headache for you.  Just email our Operations Manager, Caroline Parker (caroline.parker@rm2.co.uk) and she will be happy to discuss your requirements.