HMRC runs out of paper
A recent article stated that HM Revenue & Customs had failed to order enough paper to print its self assessment statements. This surely must be a reminder of the responsibility we have as individuals of ensuring our tax affairs are in order.
HMRC say that the reason for the oversight affecting over half a million taxpayers, is that there are more statements to issue than usual and we can certainly vouch for this.
The increase in the number of share schemes in operation has in turn increased the number of people having to disclose taxable events via self assessment.
An employee who hasn't previously filed a self assessment return and joins their company's share scheme may find that they are required to do so. An example of this may be where a participant exercises their nil cost, discounted or unapproved options. If the shares subject to the option are not regarded as readily convertible assets (for example, because they are shares in a private limited company with no trading arrangement) then details of the option exercise will need to be disclosed on a self assessment tax return for the relevant tax year that exercise occurred. HMRC will then determine the income tax due and payable via self assessment.
This also applies to participants who are higher rate taxpayers who leave employment, exercise nil, discounted or unapproved options and are required to disclose the taxable amount that may have been operated through payroll at basic rate only (i.e. because the shares were regarded as readily convertible assets therefore PAYE was due in the first instance.) The details must be disclosed on the tax return and the balance of the tax due is then collected via self assessment.
There are working sheets available to attach to the self assessment tax return which can simplify the process for first timers. We encourage participants to use these forms and offer guidance on their completion.
Dates to remember
- If you want HMRC to calculate the tax due your tax return must be submitted by this date
- Paper returns must be submitted by this date
- Online returns must be submitted by this date
- Any tax due must be paid by this date
Completing self assessment returns in relation to share schemes correctly requires detailed knowledge of the relevant legislation. If you would like to discuss any of the issues raised in this article, please call us on 020 8949 5522 and ask to speak to one of our advisers.