Illustration of tax deadline

Many of the usual significant dates and milestones of our year have passed or drifted due to the rolling impact of the coronavirus crisis.

There is, however, a significant deadline on the horizon for Enterprise Management Incentive (EMI) schemes – or any other employee-related share transactions – which is beginning to loom large.

Businesses that offer any form of share plan or employee equity transaction need to be aware that 6 July 2020 is the deadline to complete their year-end online reporting for 2019/20.

While companies have many other demands on their time at present and their usual processes may have changed significantly, it would be easy for many to fall into the trap of letting this deadline sail by unnoticed.

Which transactions apply?

All companies operating formal share plans such as EMI schemes and Company Share Option Plans (CSOPs) will have an annual reporting obligation – even if there has been no activity on these options in the tax year.

However, the reporting requirement is broader than applying to just these schemes, and includes many other transactions which may come as a surprise to both businesses and their advisers. These include:

  • Sales of shares by employees or directors for more than market value (i.e. triggering an income tax charge)
  • Share awards made to employees or directors (whether or not they paid for them – this includes even market value acquisitions where no tax is triggered, e.g. growth shares)
  • Surrender or exercise of share options by employees or directors (whether or not for payment)
  • Any deals that involved any form of rollover for shares / loan notes, or where anything happened to any options in connection with the deal
  • Share for share/loan note exchanges

What are the penalties for missing the deadline?

There are penalties, increasing with the length of time lapsed. The penalty for missing the deadline is £100. An additional £300 will be charged three months after the deadline, and a further £300 at six months. After nine months have elapsed the penalty will be a further £10 per day*.

Given the complex and individual nature of these scenarios, not to mention the proximity of the deadline, businesses in this situation may want to seek professional advice on their reporting obligations.

If your company is in this situation, please get in touch, we would be happy to help.

This document is for educational purposes only and does not constitute advice.  Any tax relief is based on current UK legislation, which may be subject to change at any time.

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Tony Maleham

Tony Maleham

Director, Tax

Tony joined the company in October 2019 to head up Progeny Tax together with

Learn more about Tony Maleham