Reportable events concerning employment-related securities must be disclosed to HMRC following the end of each tax year. For 2024/25, employers should register any new employee share plans or other reportable arrangements and submit the relevant returns (including ‘nil’ returns) on or before 6 July 2025. Automatic penalties apply for late filing and further penalties can be imposed for inaccurate returns.
Identifying and registering reportable arrangements
Any new employee share plans, or other arrangements that involve employment-related securities, which were established during 2024/25 should be registered with HMRC in time for the relevant year-end returns to be filed by 6 July.
Companies with Enterprise Management Incentive (EMI) plans should also note that, 2024/25 is the first year for which option grants must be notified to HMRC by 6 July following the end of the tax year at the latest. This is a change to the prior requirement to notify individual EMI option grants within 92 days of the date of grant.
Not all acquisitions of employment-related securities will occur as part of a formal employee share plan (e.g. stand-alone share awards and acquisitions of shares or options on a change of control or other transaction). Employers should take care to identify all arrangements that fall into this category, which might require a joint review of the position by relevant stakeholders in the group’s legal, reward and tax teams.
How this reporting interacts with other tax compliance
HMRC can use employers’ annual share plan returns to check:
- The PAYE, NIC, and Apprenticeship Levy operated on share awards;
- Any corporation tax relief claimed in relation to employee share acquisitions; and
- Amounts reported on employees’ self-assessment returns.
Employers should make sure their employment-related securities returns are complete, correct and consistent with their payroll and corporation tax compliance positions.
Share awards held by internationally mobile employees, where the reporting, payroll and corporation tax requirements do not completely align, can be challenging. Employers should review their mobile workforce carefully to identify any issues.
‘Net-settled’ share awards must be specifically reported in the annual return. Identifying such awards – where employees acquire cash rather than shares in respect of part of the award – can be challenging. Employers should review HMRC’s guidance on the corporation tax treatment of ‘cash cancelling’ or ‘net-settling’ employee share awards.
What should employers do now?
Points that employers can consider for their 2024/25 share plan reporting and, where required, registrations, include:
- Were any new plans or other reportable arrangements established in 2024/25 and, if so, is a new registration needed?;
- Were changes made to existing SAYE, CSOP, SIP or EMI plans that could affect their tax-advantaged status?;
- Is the operation of the share plans fully understood, for example:
- If a plan provides for conditional share awards (sometimes known as Restricted Stock Units or ‘RSUs’), should these be reported as securities options (which can be a complex question, potentially with broader tax and social security impacts)?
- Are the shares acquired subject to restrictions (this is common in private companies and in some continental plans)? and
- Are awards ‘cash cancelled’ or ‘net settled’ (and if so, how does this affect the UK corporation tax relief position and are calculations consistent with HMRC’s guidance)?; and
- Which reportable events have occurred and which stakeholders (e.g. HR, payroll, tax, legal, company secretarial) have the data required?
How KPMG can help
KPMG in the UK has extensive experience supporting companies to complete and submit their annual employee share plan returns and ensuring compliance with the relevant, PAYE, social security and corporation tax rules. We can also review prior years and assist with any remediation that might be required.