Web Portals For Share Plans: Why HMRC Changes Mean These are Now Highly Desirable

Posted by admin at 15:51 on 13 Feb 2017


Following the introduction of the Electronic Communications Act 2000, HMRC accepts that communications to employees can be validly delivered by electronic means such as email or internet.

For all-employee schemes like the Share Incentive Plan and SAYE, there must be a back-up paper system in case some employees do not have internet access. It is also acceptable for employees to apply for scheme benefits by electronic means, including by text message. There are no specific rules about how electronic applications can be validated. It is the responsibility of the Company to take reasonable steps to ensure that employee applications to participate in a share scheme, or exercise option rights, are validly made and properly recorded. This is often done by asking employees to supply unique identification such as NI numbers or dates of birth or a unique pin number.

With employees becoming ever more accustomed to accessing information online, companies are making greater use of technology to manage their employee communications and information sharing with their staff. Workforces are also becoming more and more mobile and companies expand into new territories or regions much more than before so the employee community may be geographically dispersed. For these reasons web portals have always held an attraction when it comes to share scheme administration. What better way to keep employees reminded of the benefits of the share scheme than to have a link on the employer’s intranet to a web portal with all the plan information?

All well and good you might say and it’s a nice optional extra if you can afford it, but surely such things are just for industry giants like the well-known supermarkets and not for smaller entrepreneurial companies? First, the cost of such platforms is not as much as you might think. At RM2 we can provide you with an employer branded web portal from just £2,950 + VAT set-up and annual maintenance of £950 + VAT. Second, it is smaller companies that most need to get the employee engagement optimised and administration costs and paperwork minimised.

Furthermore HMRC have, in their Employment-Related Shares & Securities Bulletin No.5 in December 2012, issued new guidance in relation to tax advantaged share schemes and the need for associated paperwork for EMI options.

Under EMI, the option agreement can set out details of the restrictions on the shares, performance conditions or forfeiture conditions in the text of the option agreement itself. Alternatively, the details may be contained in another document attached to the agreement and incorporated into the agreement by reference to the document. Examples of other documents include:

  • the Articles of Association;
  • the share scheme rules; or
  • a shareholders’ agreement which an option holder is required to enter into as a condition of exercising his option (if this exists).

The above obligation has typically meant that there has been a considerable bundle of paperwork to prepare for each share plan participant. This recent HMRC Bulletin provides the very welcome revised guidance which states that it is now not necessary to include a hard copy of these associated documents with each option agreement but the agreement must state where participants can obtain or access a copy of these. Where the details are included by reference to a separate document, the option agreement will need to specify the title of the document, when it was dated or adopted and the dates of any amendments. Obviously one way to take full advantage of this new guidance is to launch a share plan portal and to advise each share plan participant that all the associated information and copies of the above documents are available on that site.

A screen shot of the home page from a sample site is shown below.

This is where RM2’s long experience in private company share schemes comes in. We have more experience than any other team in the UK in designing, implementing and operating employee share schemes. We’ve worked with hundreds of private companies and established more than a 1,150 private company share plans.

To unlock the power of employee ownership in your company, and for a free consultation with one of our technical experts without commitment, call 020 8949 5522 or email enquiries@rm2.co.uk.

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