HMRC approved employee share schemes - approval process

HM Revenue & Customs (HMRC) is continually looking at how they can provide a better service to their customers. HMRC is streamlining the approval process to be able to respond to your application as quickly as possible and to reduce the overall time taken to review draft documents and then give formal approval to proposed Company Share Option Plan (CSOP), Share Incentive Plan (SIP) and Save As You Earn (SAYE) schemes. To help HMRC, when you send in schemes for review and approval you should follow the new process explained below.

New scheme - draft documents submitted for review

  • To assist applicants, Employee Shares & Securities Unit (ESSU) provides an informal review document (checklist) for each of the approved schemes, ESSUM38802 for SAYE, ESSUM47903 for CSOP and ESSUM29700 for SIP. This checklist should always be completed and sent to HMRC to demonstrate how the scheme rules and ancillary documents satisfy the legislation. The checklist contains a list of scheme documents but this is not exhaustive as the documents will vary in relation to the company and the scheme requirements. It may therefore be necessary to provide additional information or documents not listed on the checklist.
  • To help HMRC review the draft documents as quickly as possible, if you are a practitioner, you should provide a copy of your proposed scheme rules with tracked changes against a similar scheme which HMRC has recently approved.
  • If the application is based on HMRC model rules, you should provide the proposed scheme rules with tracked changes against the HMRC model rules.
  • In either case please give a full explanation of any significant tracked changes you have made.
  • HMRC will review the draft scheme documents to ensure that the scheme is capable of approval. Once this preliminary review is completed they will tell you whether any changes are needed or whether the draft scheme is capable of approval.

New scheme - formal approval

  • The company must establish the scheme in the form agreed with ESSU before it can be formally approved by HMRC as it must have come into existence from a legal point of view. You must supply documentary evidence of the establishment of the scheme. Generally this will be by resolution of the company's shareholders in a general meeting. In some cases directors may have powers to establish a scheme under the company's Articles of Association.
  • You should submit the finalised scheme documents identified on the checklist under the column headed Final.
  • If you make any changes to scheme documents after HMRC has reviewed the scheme, these must be tracked and explained.

Scheme amendments

  • If the amendments are not to the 'key features' of the scheme then you do not need to notify HMRC of those changes. However, alterations to 'key features' do require HMRC approval.
  • Where an amendment is made affecting a key feature of a scheme, you should use track changes on the existing document(s) to show the amendments made and provide a full explanation of each significant change.
  • If the only change you make is to a rule that limits the life of an existing approved scheme by extending this period then that is not an alteration to a key feature. But HMRC will need to approve any other changes made at the same time, as set out above.

Customer service

  • ESSU will be able to respond more quickly to you if you send in all the key documents together.
  • ESSU will be able to respond more quickly to you if you submit all the key documents with a correctly completed checklist and changes highlighted with full explanations of any significant changes.
  • Please see the Employee Share Schemes User Guide for more detailed explanation of the HMRC approved employee share schemes.