Employment Related Securities - Online filing update
This year’s filing period started on 6 April 2016 with the deadline for filing online returns 6 July 2016.
Key changes to the filing process from last year include: format changes to the .ods annual return templates (need to use version 3); the employee’s ‘PAYE reference of employing company’ has now become a mandatory field on the SIP return; and in certain circumstances where shares are included in the London Stock Exchange Daily Official List, the ‘mid-market closing price’ can be used to show market value.
On 5 April 2016, HMRC issued Employment-related Securities Bulletin No 22 (April 2016) covering:
- Submitting end of year 2015 to 2016 and 2014 to 2015 annual returns
- Submission of outstanding returns
- How to close a scheme
- Request for copies of EMI option notifications
HMRC is currently changing the online filing system and from 6 April 2016 the service will only accept submissions of EMI and ‘Other’ returns in .ods format. It will not be possible to submit SIP, SAYE and CSOP returns in .ods format until around the end of April 2016.
It will not be possible to submit any returns in .csv format until the end of May 2016.
HMRC will confirm when the online filing system is available for filing SIP, SAYE and CSOP returns and those in .csv format and is confident that this will be in good time before the filing deadline. A summary of online filing availability:
The new dividend tax regime - major change or business as usual?
Tax credits attached to dividends are now a thing of the past for payments from 6 April 2016. Going forward there will be no tax to pay on the first £5,000 of dividend income, irrespective of any non-dividend income a shareholder may have. Dividends paid on shares held within pensions and ISAs are unaffected and remain tax free.
In summary the impacts on UK issuer tax advantaged SIPs are:
- Cash dividends - The impact on participants receiving cash dividends on their plan shares aligns with those for shareholders with SIP dividend income counting towards the Dividend Allowance. There will be no tax to pay on the first £5,000 of dividend income.
- Reinvested dividends - The current income tax advantages linked to holding Dividend Shares continue, so reinvested dividend income will not count towards the annual £5,000 Dividend Allowance as long as Dividend Shares are held for three years or more, or taken out of the plan due to a ‘good leaver’ reason.
- Reinvested dividends, where participants withdraw their Dividend Shares before the end of the three-year holding period due to a ‘bad leaver’ reason - Reinvested dividend income received in the three years prior to leaving will count towards the participant’s current tax year’s £5,000 Dividend Allowance in conjunction with any other dividend income received within that tax year. There will be no tax to pay on the first £5,000 of dividend income.
So, major change or business as usual? Phil Ainsley, Managing Director, Employee Services comments, “On the one hand there has been a fundamental change to the way dividends are taxed which has had an impact on both SIP administration and the information provided to participants. On the other hand, however, income tax advantages linked to holding Dividend Shares continue. There has been a major change that we’ve needed to adapt to but system development has been completed and new processes are bedded in, so it has already become business as usual.”
EU Savings Taxation Directive
With Sharesave, if a participant becomes resident in an EU member state (other than the United Kingdom) or another territory that is subject to the EU Savings Taxation Directive ('EUSD'), certain information about any payment of savings income is passed to HMRC. HMRC passes this information on to the relevant tax authority in the country of residence.
HMRC have confirmed that this reporting requirement has now been removed from EU law and the UK will mirror this change. The final EUSD report submission will be in 2016 covering the 2015/2016 tax year. Current Sharesave terms and conditions are being reviewed where there are references to EUSD reporting.
EU Market Abuse Regulation (MAR)
As covered in our April Registration Services’ regulatory round up, MAR comes into force in the UK on 3 July 2016 bringing changes to regulations governing disclosure of information, insider lists, PDMR dealings, close periods and market soundings amongst other items. Consultations and preparation are underway to finalise the detailed regulations. The European Commission has published further draft implementing regulations and two final implementing regulations. This includes the final implementing regulation concerning the format of insider lists.
Companies with traded securities and their advisers must keep and maintain insider lists which should be in electronic form. The regulations set out a mandatory format for the insider list and sets out the information to be kept on individuals on the list. This includes name, work and personal telephone numbers, full home address, date of birth, function and reason for being an insider, date and time at which the person obtained inside information, date and time at which the person ceased to have access to inside information.
Companies may hold separate permanent and project insider lists but those on the permanent list will be deemed to have knowledge at all times of any inside information and if an individual is on the permanent insider list, they cannot also be on a project list.
It is important that companies keep abreast of the changes that are coming through and it is likely that as a minimum the following will be required:
- Review and amendment of relevant policies such as the Share Dealing Code and Disclosure Policy.
- Consider impact of removal of Model Code and replacement with a company’s own procedures.
- Amendment of insider lists and gathering additional personal information required so that they comply with the required format.
- Communication/training of Directors and other appropriate employees about the new requirements.
If you'd like to discuss any of the topics above in greater detail, please contact your Equiniti Service Delivery Manager.