SAYE and CSOP on the up, but EMI falls back

Extracted from newspad July 2017

The number of companies using SAYE option based share schemes has exploded by almost a fifth between the fiscal years 2013-4 and 2015-6, HMRC announced as it published  the annual share scheme statistics after a two year gap.

There was a heartening rise of almost ten percent too during the same years in the use of the Company Share Option Plan (CSOP), which was set to disappear a few years back, but for the intervention of the Esop Centre.

By contrast, corporate use of the Share Incentive Plan (SIP) was down very slightly during the two years ending April 2016, while the usage of the hugely successful Enterprise Management Incentive (EMI) fell by 12 percent from its 2013-4 peak of 9,820 companies who operated the share options-based scheme for key employees during that year.

The number of UK companies operating SAYE rose from 440 in April 2014 to 520 in April last year  – welcome news for providers who at one staged feared that SAYE would be overwhelmed by its newer tax-advantaged scheme, the SIP.

However, company usage of the SIP fell from 820 to 800, but partnership and/or matching shares are growing in popularity, while the use of free shares is declining, according to the statistics.

The number of companies registered to deliver CSOP rose by 100 to 1,150 over the same period, though the rise in the number of ‘live’ CSOP schemes (sometimes more than one per company) was more modest, up 30 to 1310.  

The number of employees granted CSOP options within these companies rose too – from just 25,000 in 2013-4 to a far healthier 40,000 in 2015-6, though the average initial value of the options they received apparently declined from £8,200 to £6,480.

However, HMRC was forced to admit that the latest share scheme statistics were incomplete, especially for detailed SAYE usage, as data retrieval had been hit once again by serious IT glitches experienced by its seemingly jinxed Employment Related Securities (ERS) online service, which prevented some returns being processed for an extended period.

The technical problems experienced were so severe that HMRC had to abandon entirely publication of the annual share scheme statistics for the fiscal year 2014–15. This was an unheard of move by the government department.

Centre chairman, Malcolm Hurlston CBE said he was glad share schemes were ticking along even though they were not playing the part they could in promoting equality. “These tax breaks cost up to £1bn and it is money well spent. But government needs to put its heart into it too. If we see a quote from a minister by the end of the day I shall be pleasantly surprised.”

In a shock announcement days ago, HM Revenue & Customs (HMRC) extended the deadline for the submission of share schemes returns for the tax year 2016–17 from July 6 to August 24 (2017), reported Centre member Postlethwaite, the employee ownership lawyers.

In its Employment related Securities Bulletin No 24, published a few days ago, HMRC said:

“We’re aware that the ERS annual returns online service has experienced some issues. “We’re sorry this has prevented some returns from being submitted.

“The service is now working and you can upload Output Delivery System (ODS) templates and CSV files when submitting your annual return for the tax year 2016–17.

“The deadline for filing annual returns is July 6 following the end of the tax year, so for the tax year 2016–17 it’s July 6 2017.

However, in view of the recent problems encountered by customers using the ERS service we’ve extended the deadline to August 24 2017 for the tax year 2016 to 2017.”

Returns, including nil returns, must be submitted for any schemes that you’ve registered on the ERS online service, such as:

Enterprise Management Incentives (EMI); a non-tax advantaged scheme or award; Schedule 4 Company Share Option Plan; Schedule 3 SAYE scheme and/or

Schedule 2 Share Incentive Plan.

A return is required even if you have:

already paid the initial penalty of £100; had no transactions; made an appeal; had an appeal allowed; ceased the scheme by entering a final event; registered the scheme in error; registered a duplicate scheme; notified EMI option grants.

Scheme returns filed on or after August 25 2017 will incur penalties, starting with an automatic £100 penalty. Further details of the extended deadline and the penalties for late filings are contained in this link: HMRC’s ERS Bulletin No 24. Additional automatic penalties of £300 will be charged if the return is still outstanding three months after the original deadline of July 6 and a further £300 if it’s still outstanding six months after that date.

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