Since our last post on this topic, extra little nuggets have been emerging about how the new regime will work in practice. Here are some of the common traps for the unwary:
1. Paper filing is a thing of the past – it’s all online now
No, annual returns for the 2013/2014 tax year for tax-advantaged plans (form 34 for SAYE, form 35 for a CSOP, form 39 for a SIP and form EMI40 for EMI options) and other plans/awards (form 42) must still be submitted in hard copy, by 6 July 2014.
Yes, filing must be done online for the 2014/2015 tax year onwards. In order to do this, companies must register all their plans and self-certify the tax-advantaged ones, by 6 July 2015.
2. Registering plans online will be quick and easy
It seems unfortunately not, or at least not yet. We have had reports from companies having problems even getting past first base – signing up for HMRC Online Services and getting access to PAYE for employers. HMRC have asked for feedback about the online submission process through its survey, which closes on 13 June. Even when the process is fixed, HMRC warn that it can take at least 7 days to get your login details through the post. Then you have to register your plans and get a unique reference number for each in order to make your annual return online.
So the moral of the tale is don’t leave it until July next year to register your plans!
3. There is no longer any need to get an EMI option holder to sign a “working time declaration”
It is true that the old paper form EMI1 (notification of the grant of an EMI option), which the employee had to sign to confirm that he satisfied the “working time requirement”, has been dispensed with for EMI options granted from 6 April 2014 onwards.
However, the online notification of EMI grants to be made by the company now includes a statement that the employee concerned has provided the company with confirmation in writing that he works for the company for either at least 25 hours per week, or 75% of his working time. Companies should keep these confirmations on file in case of any HMRC enquiry.
4. If you aren’t going to make awards under a plan from the 2014/2015 tax year onwards, you don’t need to register it
This is strictly true for the “all-employee” plans – SIPs and SAYE schemes. Even if these aren’t ever registered online, provided the plan had received formal approval from HMRC and nothing had happened to cause approval to be lost, awards made up to 5 April 2014 will still retain their tax-advantaged status.
However, the situation is different for CSOPs. A late change made to the legislation at the time of the Budget in March 2014 means that if a CSOP isn’t registered online by 6 July 2015, all previous options, regardless of the grant date and even if they were granted when the plan had HMRC approval, will lose their tax-advantaged status.
Better make sure you do register all your plans, to be on the safe side ….
5. HMRC don’t provide help with share plans any more
Although the formal approval process for tax-advantaged plans has gone, HMRC “will respond to general questions of principle in relation to [SIPs, SAYE schemes and CSOPs], where these are not covered in published guidance”. HMRC guidance on these plans is promised for July.