Out-Law Guide | 26 Jun 2015 | 3:50 pm | 6 min. read
This guide was last updated in June 2017.
The e-filing regime replaced and updated the previous paper forms, from 2015.
In order to use the service, companies must first register all their employee share plans and arrangements, including existing ones, with HMRC via the Pay as You Earn (PAYE) online services portal. Following registration, companies must file their share plans annual returns online, also via the PAYE online services portal.
This guide sets out what employers should be aware of in relation to the regime, and notes some of the differences between the online and previous paper forms.
The first stage: registration
The deadline for online registration of any plans that existed during the 2016/17 tax year apparently remains 6 July 2017, despite HMRC extending the normal deadline for filing annual returns as a result of service outages during 2017.
As part of the online registration process, plans that benefit from tax advantages in the UK also need to be formally 'self-certified' to benefit from, or continue to benefit from, tax-favoured status. If awards were made under a new tax-advantaged scheme in the 2016/17 tax year, the scheme must be self-certified on or before 6 July 2017 in order for the 2016/17 awards to benefit from the tax advantages. This will apply to Company Share Option Plans (CSOP), Sharesave/Save As You Earn (SAYE) and Share Incentive Plans (SIP), but not to Enterprise Management Incentive Plans (EMI), for which self-certification is not required for the plan, but there is a separate online notification required for each EMI option.
Hints and tips for registration
The second stage: online annual filing
The new online administration regime also requires companies to file their annual returns online, via the government's PAYE online portal, with one annual return required for each plan or arrangement registered. In order to submit an annual return online, the relevant plan to which the return relates must already have been registered and, where relevant, self-certified.
There are specific returns for UK tax-advantaged plans. There is also a replacement for the old 'Form 42', called the 'Other ERS' return, to cover all other share plans and arrangements. Only one registration is required to cover all non-tax-advantaged arrangements, although companies can choose to have one registration per plan, if preferred.
What is the deadline for online annual filing?
Annual returns for the 2016/17 tax year must be submitted to HMRC via the online portal by 24 August 2017, an extension of the normal deadline of 6 July following the end of the reported tax year, as a result of service outages during 2017.
Companies would be well advised to register, and to self-certify where relevant, their plans and arrangements well in advance of this deadline to ensure that there is sufficient time to complete both the registration and the annual filing.
There can be substantial penalties for failure to file, or late filing of, the annual returns.”
Who should make the online annual filing?
The online filing can be completed by someone in the company; or by an 'agent', authorised by the company and registered with HMRC to act on behalf of the company for these purposes.
The company secretary is required to make certain declarations within the annual return, although in practice these can be given by someone acting on the company secretary's behalf. An agent, or the employee within the company completing the annual return, will want to make sure that they are comfortable that they have sufficient authorisation from the relevant company secretary in order to complete the filing and make the declaration(s) on the company secretary's behalf.
Are the online annual returns different to the paper forms used in previous years?
The online returns are primarily made up of information provided in spreadsheets, with a different spreadsheet for each return; although certain further information is also required at the time of submitting the filing online. Template spreadsheets are available on HMRC's website. The information required in the spreadsheets is similar to that requested in the previous paper returns, although there are some differences.
Hints and tips for completing the annual return spreadsheets
How do I file the annual return?
In order to file the annual return online, the company or its agent must access the PAYE online services portal and select the registered plan/arrangement in relation to which it wants to file the return. Once selected, you will see a 'start' page, which lists the information that you will need in order to file the return.
After this, you will be taken through various screens which will allow you to make a nil-return or upload the spreadsheets containing the reportable information. You will also be required to give details about the company filing the return and any other group companies covered by it.
For tax-advantaged plans other than EMI, you will also have the opportunity to declare if there has been an alteration/variation that needs to be notified to HMRC and to confirm whether the requirements of the relevant legislation governing the plan continue to be met. This replaces the previous system of having to obtain prior HMRC approval for these events.
At the end, you will be shown a summary page with the information provided in the return although not the information in the spreadsheets themselves. Once you have completed the filing by confirming that the information in the return is correct and complete, you will see a confirmation page with an individual submission reference. This can be downloaded as a PDF and saved onto your system. Once you get to this point, as long as the return has been filed within the deadline, there will be no penalties for late submission.
You will need to complete this process for each return required in relation to each plan or arrangement.
After approximately 48 hours, the plan registration pages within the PAYE online portal should be updated to show the return as having been successfully submitted.
Hints and tips for filing the annual returns