Employee share schemes: looking back over 2015

Posted by admin at 15:52 on 13 Feb 2017

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As 2015 comes to a close we take the opportunity to look back on the news that hit the share scheme headlines this year; and look forward to 2016.

It wasn’t the most eventful of years in the industry overall, aside from the frustrating glitches to HMRC’s new online ERS system (Employment Related Securities), which caused many companies delays and a duplication of work; but fingers crossed for the coming year.

March 2015:  George Osborne announced his last Coalition Budget before the election. The Budget was quiet on share schemes but did include an announcement that the corporation tax rate would be set at 20% from April 2016 – the joint lowest of all the G20 countries.

April 2015:  Changes were announced to the rules relating to the taxation of internationally mobile employees receiving securities options.  The residence at grant ceases to be the key question – instead income tax is apportioned according to the amount of time employees spent working in the UK between the date of grant and vesting.  Payroll record keeping becomes even more important.

May 2015:  The general election saw the return of a Conservative majority.  In the world of share schemes, that meant that the controversial Employee Shareholder Status was here to stay.

July 2015: July was the original HMRC deadline for online share schemes returns.  This was met by some (including us!) but missed by many … and that was not the end of the story. The Summer Budget announced that the dividend tax credit would be replaced by a dividend tax allowance of £5,000 per annum.  

August 2015:  August saw the second bite at the cherry for online ERS filing.  HMRC’s new system was so beset by glitches that they extended the deadline to 4 August. 

September 2015:  HMRC announced that the ERS glitches had affected previously filed share schemes returns submitted before 20 July.   Companies submitting returns are given a third bite at the cherry.  HMRC also announce the annual share schemes statistics.

October 2015:  HMRC updated their employee share schemes user manual, now available to download here.

November 2015: The annual Employee Ownership Association conference took place in Birmingham – packed with the glitterati of the share schemes world.  Our director, Nigel Mason, gave a well-received presentation on the results of a survey of companies with new Employee Ownership Trusts. Some of these will join the next Top 50 list of employee-owned companies, which lists the biggest UK companies in the UK that are owned, wholly or in part, by their employees.

HMRC (rather surprisingly) won their appeal in the Rangers (Employee Benefit Trust) case.  We wait with baited breath to see if this decision will survive a further appeal.

In his autumn statement, the Chancellor backtracked on tax credits but repeated his intention to fight the good fight against tax evasion (and, indeed, avoidance).  There continue to be rumblings about changes to salary sacrifice arrangements – which could potentially include Share Incentive Plans.

December 2015:  ProShare held their annual awards dinner.  Winners included BT, Aviva and Asda – as well as a special award to Janet Cooper for Services to Employee Ownership – congratulations, Janet!

And, of course, it is the last month, realistically, to get your re-submitted annual returns in to HMRC.  The deadline (inconveniently) is New Year's Day 1 January 2016!

Looking to the New Year, our predictions are:

  • We will see a continued interest in the new Employee Ownership Trust as business owners become increasingly aware of this tax efficient way of dealing with succession planning;
  • Continued interest in Employee Shareholder Status, especially in companies that don’t qualify for Enterprise Management Incentives
  • Increased levels of share schemes activity across all sectors as the economy continues to recover
  • Battles with HMRC on the back of the Rangers case, and potentially if changes are made to salary sacrifice arrangements
  • A better outcome for the online ERS system as it beds in over its second year

On a final note, we’d like to take the opportunity to thank all our clients and associates for their support in another fantastic year for RM2, and we look forward to extending employee share ownership with you all in the New Year.  Happy Christmas.