A&M Tax Advisor Update
In this article for employers, we have highlighted the key aspects of the Chancellor’s Spring Statement from 21 March in relation to employee share schemes and summarised how this will affect employers. We have also set out below some of the key tax deadlines coming up for employers, in relation to these schemes.
There was some welcome news for companies incentivising their staff with EMI options. In addition to relaxing certain technical aspects on how these options are documented from 6 April 2023, the time period for notifying the grant of the options to HMRC will be moved to the 6 July following the tax year in which the options were granted. The change to the notification deadline will apply to options granted from 6 April 2024 (note this is still 12 months away so the current 92 day deadline will need to be met until then).
Currently employers are required to notify HMRC within 92 days of grant – a deadline which can easily be missed but which HMRC take very seriously. The new deadline for notification will tie in with the annual reporting deadline for all share-based employee incentive arrangements – see below. This is a sensible approach which will reduce administrative time and costs for companies offering employees these particularly tax-efficient share options.
The above changes were implemented following a call for evidence on EMI options. A similar call was made in respect of CSOP options which also resulted in positive changes that were re-confirmed in the Budget, including an increase in the value of shares under option from £30,000 to £60,000 per employee, and a widening of the type of shares over which CSOP options can be granted. A call for evidence on the remaining tax-advantaged share schemes, the Share Incentive Plan and the Save As You Earn scheme was also announced within the Budget, with further details to follow.
Employers must report annually any events that occur in relation to Employment-Related Securities (“ERS”), which include any shares or other securities that are acquired by reason of employment.
For the 2022/23 tax year, the deadline is 6 July 2023. However, filing the ERS return involves several key tasks that are essential in submitting the return to HMRC and we recommend that employers start looking at this now, to ensure they meet the deadline.
The key points to remember include:
HMRC recently published Employment Related Securities Bulletin 47, which set out changes to the end of year template for these returns. The templates will be updated from 6 April 2023, with the main changes including:
Further information can be found in HMRC’s bulletin, a link to which is provided below.
HMRC has also updated the guidance notes to the templates to give more information about registering for ERS online, registering a share scheme and notifying the end of a scheme.
The additional mandatory requirements will place further administration burdens on employers, during what is already a challenging compliance timetable. We await further details from HMRC on the finer points, particularly the NIC number for employees.
Employment Related Securities Bulletin 47 (January 2023) – GOV.UK (www.gov.uk)
Some of the most common errors/issues we see arising in relation to ERS returns include:
Late ERS filings will result in penalties from HMRC as follows:
A penalty of up to £5,000 can also be charged for a material inaccuracy in an ERS return which is not immediately addressed and resolved.
At Alvarez & Marsal Taxand, our Reward and Employment Tax team have extensive experience in advising employers on their ongoing employment tax and NIC obligations.
We can offer a range of advice and services to assist employers in respect of ERS and tax-advantaged share schemes annual return compliance. Please contact your usual A&M point of contact or Louise Jenkins, Chris Prout, Aya Ishikawa, Samantha Lenox, Anita Eunson, Kathy Lloyd or Linda Cameron.