How to file HMRC notifications for unapproved options

How to complete the file for initial and annual notifications and when they're needed.

When you grant unapproved options to UK employees or directors, you must submit an annual notification to HMRC by the 6th of July following the tax year in which the options were granted.

Registering your Unapproved scheme for the first time

1. See this guide to register your scheme 
2. This guide will then help you complete the notification
   1. When you go through the process, you will be asked to upload a spreadsheet. You can find this on the Annual notifications area of the platform.
      1. Fill in the first sheet, Other_Grants_V4. All 4 columns should be filled in. This is fairly self-explanatory and is just entered in aggregate for each grant date.
         
         

For subsequent annual notifications

• If no options have been cancelled or exercised in the previous tax year, you will only need to submit a nil return.
• If there has been some activity within the scheme (e.g. the grant, exercise or cancellation of options), you will need to follow this guide
  • When you go through the process, you will be asked to upload a spreadsheet. You can find this on the Annual notifications area of the platform.
  • The instructions below will help you complete the information we cannot complete on your spreadsheet. We will pre-populate most of the answers, but please double-check they're all correct. 

Here's a quick rundown of some of the trickier questions and mandatory fields that might not be pre-populated (not all of the questions apply to each tab): 

Is the event in relation to a disclosable tax avoidance scheme? For a normal unapproved option, no. 

National Insurance number: we will pre-populate all the NI numbers saved on Vestd, but please add those that are missing. This is a mandatory field. 

PAYE reference of employing company: again we'll pre-populate this information if we know it, but please enter the company's PAYE number if not. This is also a mandatory field. 

Were the options exercised? Yes, if exercised, no if cancelled

If securities were acquired, what was the Market Value on the date of acquisition: what was the Actual Market Value of the shares at the time of exercise? 

HMRC valuation reference: If HMRC acknowledged your valuation, please enter the reference number given. This is also mandatory (only if a reference was given). 

If the shares were acquired, total deductible amount excluding any consideration given for the securities: typically £0, unless a charge was made for the grant of the option or other expenses were incurred by the employee or director. 

Was PAYE operated? If the shares were readily convertible into cash (i.e. immediately sold, like during an exit event), both Income Tax and National Insurance are due on the difference between the exercise price and the sale price. This must be paid by the company via PAYE then reimbursed by the shareholder within 90 days. If this is the case, enter "Yes." If not, enter "No" as this is a mandatory field. 

Our team, content and app can help you make informed decisions. However, any guidance and support should not be considered as 'legal, tax or financial advice.'