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Share Schemes – Important Procedural Changes

A number of important procedural changes were made to the administration of both approved and unapproved share schemes in the Finance Act 2014. A regime of self certification now applies to new share schemes but the new rules also have implications for all existing share schemes. Failure to take appropriate action is likely to prove costly. As the first of the time limits is fast approaching, the purpose of this note is to remind you of what the main requirements are and what you should do to ensure your scheme is compliant. The note has been split as between EMI options, approved share schemes and unapproved share schemes.

EMI Options

From April 2014 an employer must register online any:

  • already granted, but currently unexercised, EMI options; and,
  • any EMI options granted from that date.

The deadline for registering options granted pre 6 April 2014 is 6 April 2015. The old rule whereby EMI options have to be notified to the Revenue within 92 days of their grant still applies, but must now be done on-line. In addition, companies must register and self certify i.e. confirm the EMI shares comply with the statutory requirements before any notifications of EMI options can be made. If EMI options are not registered in time they will cease to be treated as EMI options and lose their tax advantaged status.

Approved Share Schemes

All approved share schemes established before 6 April 2014 must be registered with the Revenue by 6 July 2015 using the on-line registration service. This covers company share option plans (“CSOPs”), share incentive plans (“SIPs”) and Save As You Earn option schemes (“SAYE option schemes”) . Companies must also confirm that the scheme meets the requirements of the legislation and has done so since 6 April 2014. If companies fail to meet this time limit then any SIP awards or SAYE options granted on or after 6 April 2014 will lose their tax advantaged status. Any SIP awards or SAYE options granted before 6 April 2014 will not lose their tax advantaged status, but will only be treated as SIP awards or SAYE options from the tax year in which notification is made. For CSOPs all existing options whenever granted will lose their tax favoured status.

Unapproved Share Schemes

Whilst unapproved schemes do not benefit from any tax advantages they are still required to be registered on-line.

Annual Returns

Companies must file annual returns for all forms of share scheme providing certain types of prescribed information by 6 July following the end of the tax year. Annual returns cannot be made until the scheme is registered.

How does a company register?

If a company is not already registered it should take steps now to register using the PAYE on-line services using the “Employment Related Securities” option from the menu. If a company has more than one scheme each must be registered separately.

Failure to comply

Apart from the loss of tax advantaged status for approved schemes, failure to comply with the new regime will result in the company incurring penalties, which ratchet up depending on the length of the delay.

For further information, please contact Niall Murphy.