UK employee share reporting is not optional

All UK companies, employers and trustees have a legal duty to report to the UK’s tax authority HM Revenue & Customs (HMRC), when an employee receives share-based remuneration regardless of whether there is any tax payable.

All UK companies, employers and trustees have a legal duty to report to the UK’s tax authority HM Revenue & Customs (HMRC), when an employee receives share-based remuneration regardless of whether there is any tax payable. Because the reporting does not necessarily lead to a tax bill, it is often mistakenly overlooked.
Share-based remuneration to consider includes:

  • Share options: the granting and exercise of options must be reported separately
  • Restricted stock units: the award of the stock must be reported and any vesting should be reported separately
  • Forfeitable shares: the award, and when the forfeit period ends, must be reported
  • Long-term incentive plans: this is where the incentive is in the form of shares for the employee.

Reports must be made annually and are based on the UK tax year - that is, for each year ending on 5 April. Reports need to be filed with HMRC by the following 6 July.  This is the second year in which online submissions are required, replacing the previous paper forms.

Failure to report

Failure to file share-based remuneration forms can lead to penalties and, since online reporting was introduced, it has been anticipated that penalty notices will be issued automatically.

Separate forms exist for certain government-approved schemes, and employers should consider whether they have any employee share-based remuneration to report. If so, they must be registered for PAYE-ERS online to set up the scheme (this can take up to 10 days) and then complete the relevant HMRC templates.
This reporting is separate to reporting and deducting any tax required on any exercise of a share option or restricted stock vesting, which may have to be undertaken within the payroll process in the tax month (6th-5th) of the event – a system known as PAYE.

Talk to us

TMF Group’s experts in the UK can help you register for PAYE online and register the schemes. We can also act as your agent, completing the required templates. Our assistance extends to calculation of tax liabilities due on the exercise of share options and on restricted stock vesting; and informing you of payment dates.

Need more information? Get in touch with our team in the UK.

Find out about our Accounting and Tax services worldwide.

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