Share Incentive Plan: guidance notes

Question 1

1. Guide to completing Share Incentive Plan (SIP) annual return attachment

Accepted Answer

The company secretary or the person acting as the company secretary must complete an online end-of-year return on or before 6 July for each registered and self-certified Schedule 2 SIP scheme.

The SIP attachment only needs to be completed and then uploaded when there is something to report. If you have nothing to report you will need to complete an online ‘Nil’ return.

Complete only the worksheets that are relevant but upload the whole workbook, including any blank sheets. If you change the structure or formatting of your attachment it will be rejected.

If you have created your own comma separated values (CSV) files using the HMRC technical note, upload each CSV file that contains data relevant to that scheme type. The CSV template you have created must accurately match the exact wording on the HMRC technical note. You must make sure all punctuation and grammar has been matched. If the column does not accurately match the technical specification, it will not be possible to submit the file successfully.

You can use the employment related securities (ERS) checking service to check your attachment. The checking service will tell you if and where there are any formatting errors in your attachment. You can use the checking service as often as you like. Checking your attachments regularly allows you to identify and correct these errors. This makes it easier to submit your return at the end of the year. The checking service is accessed through view my schemes and arrangements’ on the online ERS service.

1.1 General guidance on valuations

All values should be entered in pounds sterling and pence and entered to four decimal places. Where necessary, round up figures ending in 5 or more and round down figures ending in 4 or less. You should use any reputable currency convertor to convert to pounds sterling if the value is quoted in another currency.

There is no change in valuation practice with the introduction of the templates. It is not necessary to have formally agreed the valuation of shares and securities with HMRC.

However, where shares are not listed on a recognised stock exchange, you may have asked for a valuation from HMRC. If you agreed a valuation with HMRC then provide the reference number on the attachment. If the number is prefixed with ‘Company Reference Number (CRN)’ do not enter those letters. If you did not get a valuation you should continue to retain records of how you reasonably established the valuation.

1.2 Actual Market Value (AMV)

AMV is the value of a share or security after taking into account any restrictions or risk of forfeiture.

1.3 Unrestricted Market Value (UMV)

UMV is the value of a share or security ignoring any restrictions or risk of forfeiture.

1.4 Recognised stock exchange

AIM is not a recognised stock exchange. For more information about recognising stock exchange read recognised stock exchanges: definition, legislation and tables,

1.5 General guidance on completing the attachment

You must use the required formats mentioned within this guide when answering a question or a column requires an entry. If a question does not apply or is not mandatory, leave the entry blank.

Entering ‘N/A’ or ‘not applicable’ will result in your attachment being rejected. You can read the technical notes to find out if a field is mandatory, conditional mandatory or optional. The notes will also explain the formatting required for each question.

Where a question or column requires a yes or no entry, the following formats are acceptable:

Yes
yes
YES
No
no
NO

Question 2

2. SIP_Awards_V4 worksheet

Accepted Answer

Use this worksheet to tell HMRC about shares acquired or awarded in the tax year.

2.1 Question 1: Date of event (yyyy-mm-dd)

Enter date the shares were acquired by or awarded to the employee.

2.2 Question 2: Number of employees who acquired or were awarded shares

Enter total number of employees who acquired or were awarded shares on this date.

2.3 Question 3: Type of shares awarded

Enter a number from 1 to 4 depending on the type of share awarded.

Matching shares: shares awarded to the employee at a ratio of no more than 2 to 1 partnership shares.
Free shares: shares awarded at no cost to the employee.
Partnership shares: shares bought from deductions from the employee’s gross pay.
Dividend shares: shares bought from dividends paid on shares already held in the SIP.

2.4 Question 4: If free shares, are performance conditions attached to their award? (yes/no)

Free shares are awarded to employees without any payment by the employee towards their cost.

Some awards of free shares may be subject to performance conditions that the employee must meet to qualify for the award.

2.5 Question 5: If matching shares, what is the ratio of matching shares to partnership shares?

Enter ratio or for example 2:1; 2/1.

Enter the ratio with the matching portion on the left side of the ratio.

The following are examples of how to report matching share awards.

The matching share ratio is 1: 1 up to the first £100 contributed and then there is no further match. Using this ratio, an employee who contributes £200 will therefore receive £200 partnership shares and £100 matching shares, you would enter the partnership share award in one line and the matching share award in a separate line. In the line in which you provide details of the matching share award you enter 1:1 in column 5 of that line.

Example 2 ― tiered ratio

This is 1 matching share for 1 partnership share ratio on the first £20, then 1 matching share for 2 partnership shares on the next £80 and then no match thereafter. You record partnership share awards on one line and each matching share award entry separately.

For example, an employee who contributes £200 will therefore receive £200 partnership shares and £60 matching shares under this rule. You would record £200 partnership shares in one line , the £20 matching shares in another line enter 1:1 in Column 5 of that line, and £40 in another line and enter 1:2 in column 5 of that line.

UMV is the value of a share or security ignoring any restrictions or risk of forfeiture.

2.7 Question 7: Total number of shares acquired or awarded

Enter in figures the total number and not the value of shares acquired or awarded to all the employees on this date.

2.8 Question 8: Total value of shares acquired or awarded

Enter the total unrestricted market value of all shares acquired or awarded to all the employees on this date.

2.9 Question 9: Total number of employees whose award of free shares during the year exceeded the limit of £3,600

Enter in figures the total number of employees whose free share awards exceed the annual limit.

2.10 Question 10: Total number of employees whose award of free shares during the year was at or below the limit of £3,600

Enter in figures the total number of employees whose free share awards did not exceed the annual limit.

2.11 Question 11: Total number of employees whose award of partnership shares during the year exceeded the limit of £1,800

Where a residual partnership share deduction has been carried forward from the previous tax year and leads to the partnership share limit being exceeded, enter in figures the total number of employees this affects.

2.12 Question 12: Total number of employees whose award of partnership shares during the year was at or below the limit of £1,800

Enter in figures the total number of employees who acquired partnership shares within the annual limit.

2.13 Question 13: Total number of employees whose award of matching shares during the year exceeded the limit of £3,600

Enter in figures the total number of employees whose matching share awards exceeds the annual limit.

2.14 Question 14: Total number of employees whose award of matching shares during the year was at or below the limit of £3,600

Enter in figures the total number of employees whose matching share awards does not exceed the annual limit.

2.15 Question 15: Are the shares listed on a recognised stock exchange? (yes/no)

A recognised stock exchange (RSE) is defined in legislation as:

any market of a recognised investment exchange designated as a recognised stock exchange by an order made by the Commissioner for HMRC
any market outside the UK designated in such an order

If you enter ‘no’, go to question 16.

2.16 Question 16: If no, was the market value agreed with HMRC? (yes/no)

The market value of shares can be agreed with HMRC in advance of the award of shares from a SIP.

If ‘yes’, go to question 17.

2.17 Question 17: If yes, enter the HMRC valuation reference given

The HMRC valuation reference will be on the valuation letter sent to you from the Shares and Assets Valuation office. The reference given will normally be your Company Reference Number (CRN). Enter the full reference including the letters and numbers. If the beginning of your reference has three letters, only include the numbers.

Question 3

3. SIP_Out_V4 worksheet

Accepted Answer

Use this worksheet to tell HMRC about shares that employees have withdrawn from the SIP and are no longer part of the plan. Do not include forfeited shares.

3.1 Question 1: Date of event (yyyy-mm-dd)

Date when the shares were withdrawn by the employee or the date the employee was no longer employed.

3.2 Question 2: Employee first name

This is the employee’s first name.

3.3 Question 3: Employee second name (if applicable)

If the employee’s second name is not available then do not make any entry in this column.

3.4 Question 4: Employee last name

This is the employee’s last name.

3.5 Question 5: National Insurance number

In most cases, individuals included on an ERS end of year return should have a National Insurance Number. However, there may be some exceptional circumstances where an individual needs to be included on a return but does not have a National Insurance number. In these circumstances, an alternative reference should only be used on the ERS end of year return; it should not be used in any other correspondence.

This reference is not a National Insurance number and should not be given to the individual or used in any other correspondence with HMRC.

Where there are exceptional circumstances, the required format for the alternative ERS reference will be a total of 9 characters. This will be 2 letters, 6 numbers and 1 letter consisting of:

TN ― to indicate an ERS reference
employee Date of Birth in format DDMMYY (for example, 080403) ― this data will enable HMRC to trace the individual
no National Insurance number Reason Identifier (X, Y or Z) ― this is to identify the reason why an individual does not have a National Insurance number
X ― Under 16 years old
Y ― Applied for a National Insurance number and is waiting to receive it
Z ― Never paid National Insurance contributions as they have not been liable to UK National Insurance contributions ― for example, they’re not resident in the UK or are an ‘intra-company worker’ on transfer to work in the UK

3.6 Question 6: PAYE reference of the employing company

Enter the PAYE reference number of the SIP participant’s employing company.

3.7 Question 7: Number of free shares ceasing to be part of the plan/

Enter in figures the total number and not the value of free shares per employee ceasing to be part of the plan.

3.8 Question 8: Number of partnership shares ceasing to be part of the plan

Enter in figures the total number and not the value of partnership shares per employee ceasing to be part of the plan.

3.9 Question 9: Number of matching shares ceasing to be part of the plan

Enter in figures the total number and not the value of matching shares per employee ceasing to be part of the plan.

3.10 Question 10: Number of dividend shares ceasing to be part of the plan

Enter in figures the total number and not the value of dividend shares per employee ceasing to be part of the plan.

Enter in figures the unrestricted market value of a free share on the date the shares ceased to be part of the plan.

3.12 Question 12: Unrestricted market value per partnership shares at date ceased to be part of the plan

Enter in figures the unrestricted market value of a partnership share on the date the shares ceased to be part of the plan.

Enter in figures the unrestricted market value of a matching share on the date the shares ceased to be part of the plan.

Enter in figures the unrestricted market value of a dividend share on the date the shares ceased to be part of the plan.

3.15 Question 15: Have all the shares been held in the plan for 5 years or more at the date they ceased to be part of the plan? (yes/no)

If ‘yes’, no more information is needed for this event. If ‘no’, read question 16.

3.16 Question 16: If no, for other than dividend shares, was PAYE operated? (yes/no)

PAYE should have been operated if the shares can readily be converted into cash. There are exceptions, for example where the employee left employment because of injury, disability or redundancy. Enter ‘yes’ or ‘no’ in this field.

3.17 Question 17: If no, does this withdrawal of shares qualify for tax relief? (yes/no)

Tax relief is sometimes applied to shares that are withdrawn early, less than 3 or 5 years from the date of the award or acquisition. Usually this will be because the employee is a good leaver — often someone who has left employment on grounds of injury, disability or redundancy.

Cookies on GOV.UK