Tax

Employee Incentives Update | June 2020

Written on 18 Jun 2020

Welcome to our Employee Incentives Update for June 2020.

This edition focuses on the impact of the Covid-19 pandemic on executive pay and employee share plans, including recent updates from HMRC on tax-advantaged plans. It also includes a reminder about the 6 July 2020 deadline for filing HMRC employment-related securities annual returns for the 2019/20 tax year.

We hope that you find this update helpful. If you would like to discuss any of the issues raised, please let us know. Our contact details are set out below.

Employment-related securities bulletin | Impact of coronavirus

HMRC published Employment Related Securities Bulletin 35 on 8 June 2020. This covers the impact of coronavirus on tax-advantaged share plans, and contains some helpful clarifications for participants, employers and administrators.

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Annual returns for employment-related securities | Deadline 6 July 2020

The deadline for submitting annual returns in respect of employment-related security arrangements for the tax year ending 5 April 2020 is 6 July 2020.

This is an important date to note, particularly as many employers will face greater administrative challenges gathering the necessary information this year with remote working arrangements.

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Coronavirus | Impact on remuneration arrangements

Businesses have been carefully monitoring costs and considering how best to manage them over the coming months. Many affected employers will have applied for one or more of the government support schemes (including the Coronavirus Job Retention Scheme). In this article, we consider the impact of the pandemic on remuneration arrangements.

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Executive pay | Institutional investors publish guidance

A number of bodies representing shareholders (including the Investment Association) have published guidance setting out expectations in the light of the Covid-19 pandemic.

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HMRC guidance | Homeworking expenses and benefits provided during coronavirus

HMRC has published guidance on various employee tax issues which are regularly arising for employers in connection with coronavirus.

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Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme (CJRS) is entering its next phase. From 1 July 2020, 'flexible furloughing' is permitted for previously furloughed employees. From 1 August 2020, the level of government grant provided through the CJRS will start to taper down (with businesses asked to contribute a share).

Separately, on 29 May 2020, HMRC opened a short consultation on draft legislation providing for the taxation of COVID-19 business support grants (including the clawback of grant payments under the CJRS). Further information is set out in this Insight.

The CJRS continues to be a fast-moving area, and employers claiming under the scheme need to keep up with developments (including the latest HMRC guidance). Our latest Insights on employment and the CJRS are here.

Budget 2020 | Finance Bill 2020 and beyond

Although it may now seem like a lifetime ago, the UK Budget that took place in March contained a few measures relating to employee share plans (as we discuss in this Insight).

A number of tax changes are being implemented through the Finance Bill, which is currently going through its parliamentary stages. The intention is that the legislation will also include CJRS clawback provisions.

Press reports suggest that the Chancellor is considering making an economic statement in July (which may include a limited package of measures), with the main Autumn Budget to follow later this year.

Termination payments | employer's class 1A NICs now payable above the £30,000 threshold

Employer’s class 1A NICs are now payable on termination payments above the £30,000 threshold. This change took effect from 6 April 2020. Employers must ensure that they account for and report this additional liability correctly to HMRC.