Important Tax Deadlines for Employers Explained
Employers Tax Deadline
In this week’s newsletter, Dragon Argent’s small business tax advisors, Misha Patel have drawn attention to two tax reporting deadlines which are approaching on July 6th 2022. These are employment related securities reporting and P11D reporting. We have been receiving a lot of questions from clients about these and as tax deadlines can be daunting, we felt it would be useful to summarise these here for you, as well as common issues and questions.
EMPLOYMENT RELATED SECURITIES REPORTING
Certain transactions involving employment related securities (ERS) are required to be reported annually to HMRC by the employer company. ERS are shares or securities that a company gives to its employees.
These can include HMRC-approved share schemes, such as enterprise management incentives (EMIs). They are popular ways for companies to reward, incentivise, and retain their key employees.
EMI: What events are reportable?
The most common reportable events are:
Exercise of Options: If during the year options have been exercised, which will include taxable and non-taxable options.
Lapses: If options were released in consideration of new option grants or options have lapsed or been cancelled.
Replacement of Options: the company went through a merger or acquisition and the options were replaced as a result.
KEY CONSIDERATIONS
When does an annual return need to be filed: You will need to file an annual return by 6 July 2022, if a reportable event has occurred in the 2021/22 tax year (i.e., between 6 April 2021 and 5 April 2022).
How do you file a return: ERS reporting is made through HMRC's online portal, this is the same portal which is used for payroll filings. If you have a payroll agent, they should be able to make the reporting on your behalf.
Filing Issues: If you have not previously registered the scheme, we advise you to do so well ahead of the 6 July deadline, it can usually take up to seven days before the unique scheme reference number is provided to enable the filing.
Non-tax advantaged plans: A single return which covers all existing non-tax advantaged plans will be enough. You do not need to file a return for each non-tax advantage plan separately.
No activity taken place during the year: If you have previously registered a plan, you must continue to file a return even if there has been no activity in the tax year. In these circumstances, a ‘nil return’ should be filed.
Terminated plans: if you no longer use a share plan, you will still need to make an annual return for outstanding awards.
HMRC EMI templates: You should always download the most recent templates from the HMRC website. The templates are format sensitive, and you should not alter the excel document (i.e. Deleting tabs or columns). Altering the excel document will result in an error message and the gateway will not allow you to upload it to the site. Before uploading a document HMRC do allow you to check for any formatting errors. We would recommend using this service to avoid delays.
Penalties: For late filing of an ERS return HMRC will issue a late filing penalty of £100 on 7 July 2022. Additional late filing penalties will be charged if the return remains outstanding as follows:
three months after the filing deadline £300
six months after the filing deadline an additional £300
nine months after the filing deadline, further daily penalties of £10 may be charged until the return is filed.
Please note the registering of any plan creates an annual filing obligation.
P11D REPORTING
A P11D is a form which HMRC requires all UK Employers to file if they have given their employees taxable benefits or expenses. The kinds of benefits and expenses that need to be included are:
Mileage payments
Car or fuel benefit
Vans available for private use
Health insurance
Interest-free loans, e.g. season ticket loans
Relocation expenses
Living accommodation
KEY CONSIDERATIONS
When does a P11D need to be filed: You will need to file an annual return by 6 July 2022 for any benefits or expenses provided to employees or directors. (i.e. between 6 April 2021 and 5 April 2022). Any tax due must be paid by the company by 22 July 2022.
How do you file a P11D return: ERS reporting is made through HMRC's online portal, this is the same portal which is used for payroll filings. If you have a payroll agent, they should be able to make the reporting on your behalf.
Directors’ loan account: If you are a director and your director’s loan is less than £10,000 then you do not need to pay interest on the money you owe to the company. However, if the overdrawn amount is more than £10,000 at any point in the tax year then this would be treated as a loan from the business to the director and therefore will need to be reported on a P11D form.
Phone: If an employee uses their personal mobile for work purposes and where the company has repaid these expenses; this can be overlooked.
Neglect/forgetfulness: The accuracy of the P11D form is only as good as the data used to complete it. We recommend that the company keeps their records up to date and tries to reconcile their accounts often to address any problems early.
Penalties: For late filing of an P11D return HMRC will issue a late filing penalty of £100 per every 50 employees on 7 July 2022.
Dragon Argent’s small business tax advisors can provide tax advice and assistance in relation to all aspects of the annual reporting requirements. For further information on how we can help please get in touch by scheduling a discovery call with us today.
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