The importance of share plan administration

When it comes to employee share plans, the administration that goes into the schemes is very important, but it can also be quite difficult for companies to comprehend and handle. It may be easier to outsource the administration. Below are the reasons why it may be best to let another company, such as RM2, administer your share scheme.

Setting up your plan with HMRC

As HMRC requires all employee share plans to be registered on their Government Gateway site, it is important to get the scheme set up to inform them of annual returns and share option grants. This is all to easy to forget, though it can have serious consequences, as HMRC can issue fines for companies who do not register their schemes or file annual returns in the correct timeframe. Authorising another company to manage this could be a big stress reliever!

EMI options

The Enterprise Management Incentive plan (EMI) is the most popular share option plan for small private companies and SMEs, partly because it is so tax efficient. However, if the options are not registered with HMRC correctly, the options will not qualify at all for the beneficial tax treatment.

EMI option awards must be registered with HMRC within 92 days of the date the options are granted – and HMRC’s system uses a specific procedure that could be confusing to a business who is not familiar with the process. For example, it is vital to ensure that the EMI notification references are saved via screenshot at the time of registration, as HMRC no longer provide copies of option notifications – your screenshot is likely to be the only evidence that options have been registered correctly.

Again, this is vital administration that is easily forgotten while you are focusing on your day job. Taking on an external share plan administration firm such as RM2 will reassure you that the registration is completed in a timely way, and that your confirmations will always be saved.

Annual Returns

All employee share plans require an annual return to be completed every year. Again, this can be quite a challenging (and time consuming) task for someone to do if they do not know the procedure. Even if no events have happened in the applicable tax year (6th April to 5th April), a “nil” return still needs to be filed. The deadline to file the return for all employee share plans is 6th July. If the return for the plan has not been filed by then, HMRC will issue fines. Additionally, HMRC does not supply copies of annual return confirmations, which makes it crucial to save these.

At RM2, we work with a wide range of clients who operate different types of employee share plans and we have decades of experience to expertly advise and support you on all aspects of the associated administration. For further assistance or for any queries you may have, please contact