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Any company that operated an employee share incentive arrangement (whether tax-advantaged or not) in the 2018/2019 tax year must file an online return with HM Revenue & Customs (HMRC) by 6 July 2019 to avoid penalties. An initial penalty of £100 will be due if a return is just one day late.
As you will be aware, changes were announced in the October 2018 Budget to the qualifying conditions for Entrepreneurs' Relief (ER) requiring that, as well as holding 5% of share capital (by nominal value) and 5% of voting rights, an ER shareholder should be entitled to 5% of dividends and proceeds on a winding-up at all times during the relevant holding period (one year until 5 April 2019, two years thereafter).
The "off-payroll" working rules typically apply to individuals supplying their services through an intermediary (commonly a personal service company) and were introduced for public sector contractors in April 2017. Legislation to extend the rules to the private sector from April 2020 will be published this summer but, in the meantime, there is action that those engaging workers through personal service companies (PSCs) can take.
Last week we reminded you that the deadline for filing your online share plan returns for 2016/17 was 6 July. On Friday, HMRC published a bulletin acknowledging that the annual returns online service had experienced technical issues which prevented some returns from being submitted.
The deadline for filing your online share plan returns for 2016/17 is fast approaching.
In its recent report on UK Corporate Governance, the Business, Energy and Industrial Strategy Committee made recommendations for reforms that could, if adopted, mark a change in the structure of executive remuneration packages.
The 2016/17 tax year ended on 5 April and any company operating employee share incentive arrangements (whether tax-advantaged or not) will need to file online returns by 6 July 2017. Failure to file on time leads to automatic penalties (initially £100 even if a return is just one day late) so we encourage you to submit your returns as early as possible.
Performance Share Plans offer executives the opportunity to acquire shares in a company by reference to its success measured against performance targets. Participants are granted options at an exercise price set at nil or nominal value.
Share Incentive Plans are all-employee, tax-advantaged share ownership plans. Companies can award each participant free shares worth up to £3,600 per year.
Employee Benefit Trusts (EBTs) are trusts which can be established by companies to help with the operation of their employee shareplans. EBTs can be established onshore or offshore and can be funded by loans or contributions from group companies.
Under an Enterprise Management Incentive (EMI) Plan a company can grant tax-advantaged share options to selected employees. The rules governing the terms of EMI options are very flexible which means they can be tailored to deliver the desired incentive and reward.
Also known as 'SAYE Option Schemes' or 'Save-As-You-Earn Schemes'
Company Share Option Plans are the traditional method of giving employees a personal interest in the future success of a company. Options are granted at their current market value and can be tax-advantaged up to £30,000 per person.
Amidst the negative publicity surrounding incentives with 'unacceptable' tax-avoidance features, it is important to remember those plans that can be designed within tax-favourable HMRC rules. Although there are limits on the levels that can be awarded under such plans, the benefits of tax-advantaged status should not be underestimated.
2017 is the year in which many UK quoted companies will, once again, have to put their remuneration policies to a binding shareholder vote. Although the 2017 AGM season is still some way off, early preparation is advisable, especially in light of increasing shareholder interest in executive remuneration.
The EU Market Abuse Regulation - What does it mean for employee share plans?