Q&As

Do phantom options and SARs need to be reported to HMRC as part of the annual online employee share schemes return?

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Published on LexisPSL on 05/05/2017

The following Share Incentives Q&A provides comprehensive and up to date legal information covering:

  • Do phantom options and SARs need to be reported to HMRC as part of the annual online employee share schemes return?

Do phantom options and SARs need to be reported to HMRC as part of the annual online employee share schemes return?

Employers (or other responsible persons) are required to provide specified information to HMRC in their annual share schemes returns in relation to reportable events involving employment-related securities or securities options. Such information must be provided to HMRC by 6 July following the end of the tax year in which the reportable event took place and must be filed online.

Reportable events include an acquisition, pursuant to a right or opportunity available by reason of employment, of:

  1. securities (including upon exercise of an option), as defined in section 420 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003)

  2. an interest in securities, or

  3. a securities option, as defined in ITEPA 2003, s 420

For more details, see Practice Note: Employment-related securities—reporting obligations.

If the relevant award does not involve any entitlement to shares or other securities then there is no requirement to include it in the annual share schemes return. This is very relevant in relation to phantom options and share appreciation right (SARs), as phantom options normally only provide an entitlement to cash, whereas SARs can provide an entitlement to cash and/or shares,

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