RTSO1 & ESPP

[JimmyCorkhill]

Hi,

I have taken part in an ESPP in work in the last couple of years. Deductions are taken from my payroll each month and twice a year, shares are purchased in the company at a 15% discount.

I incorrectly believed the tax to be paid on the discount was being withheld by payroll but it turns out it is not, so I owe for tax and probably interest.

For 2019 & 2020, I have received 4 rounds of shares where I have not paid any tax on the discount. I have yet to sell the shares but received the discount.

The latest round of shares I received was on November 1st, so I still have time to submit an RTSO1 form for these shares as it is within 30 days.

My question is on the previous 3 rounds of shares I received (May 2019, Nov 2019, May 2020). Should I still submit an RTSO1 form for each of these periods as well? And then wait till the revenue come back to me with an interest charge? I don't see anywhere on the RTSO1 form to add an interest payment.

Or if I need to calculate the interest myself, is there a different interest rate for IT v USC/PRSI?

I also have to submit my Form 12 for 2019, am I correct in thinking there is nothing on the Form 12 I need to input in relation to the above?

I do believe I need to fill in a Form 11 for 2019 but have possibly missed the deadline, can anyone confirm if this is the case? (I have never filled in a Form 11 before to the best of my knowledge but believe I may have to because of the RTSO1.)

Any advice is greatly appreciated.

Thanks

 

[torblednam]

First thing is first - are you absolutely certain that the tax is not deducted at source? A bona fide ESPP should result in tax being deducted as a BIK - see here: [broken link removed]. The last line of that link does confirm that some plans may be drafted so as to give rise to options, in which case RTSO applies, which may be your situation, but you need to get certainty.

If you are right and it is an RTSO situation, then you are a "chargeable person" and a Form 11 is required, for any year that you exercise options, rather than a Form 12.

The deadline for filing 2019 returns has been extended to 10th December, but you must file and pay online via ROS to avail of this deadline.

At this stage there is little point in you filing RTSO1's for the 2019 exercises, it is basically just a form of preliminary tax, which is later superseded by the filing of a return.

To sort 2019: you need to register for Income Tax on ROS as soon as you can (as there is a lead in time to get your registration / access sorted), making sure that you register with effect from 2019. Then get your 2019 Form 11 filed and paid online by 10th December, to avoid a late filing surcharge. After that, if they want interest due to your failure to pay the tax under the RTSO system, they'll let you know.

To sort 2020: either at the same time as registering for Income Tax, or once registered on ROS, you should be able to add RTSO as a tax type, and then you can submit RTSO1 for the two 2020 exercises, and pay the RTSO tax. Then in 2021 you can file your Form 11 and that RTSO tax paid will be a credit against your final 2020 tax liability.

 

[JimmyCorkhill]

Firstly, many thanks for your detailed reply it is very much appreciated.

I am registered with revenue via myaccount and can log in there no problem.

I am trying to register for ROS which I presume I need to be registered for Form 11?

However I may be doing incorrectly, as when I try to register I select

Apply for RAN: I select an individual or company then it asks me to select tax type and enter registration number so I selected Income Tax and tried to enter my PPSN number but I get an error message saying
"Either the tax type you have entered is not valid for this registration number or you have entered the registration number incorrectly. It can take up to 3 working days for new tax types or registration numbers to fully update so that you can complete this step.Please note that a PAYE registration number is not valid for ROS. ROS services are available for self-assessed taxes, business taxes or reporting obligations."

Any ideas how to solve this? I tried ringing revenue but they seem to be closed from 1.30pm onwards.

Thanks

 

[torblednam]

You need to register yourself for Income Tax self assessment first, and then once that registration is live, then ROS will recognise you as a customer for whom a RAN can be generated, if that makes sense... (currently it sees you as a PAYE only taxpayer who has no live tax heads requiring use of ROS). I don't know what the turnaround time is for each step at present, although it should be pretty much fully automated so hopefully you'll be able to request a RAN before the end of the week and have it by early next week.

eRegistration

This page explains eRegistration

www.revenue.ie

eRegistration
The eRegistration service allows customers and agents to manage their registrations online. Through eRegistration you can cancel your active registration for taxes and re-register for these taxes.

How to access the service
If you are registering for Income Tax (IT) only, you can access the service in myAccount through ‘Manage My Record’ and ‘Tax Registrations’.

 

[JimmyCorkhill]

Thank you once again.

Trying to register now, have gone to Tax Registrations in Manage My Record.

For date business activity commenced, should I use 01.01.2019?
For business description I put in Individual/PAYE, is that ok?
For NACE code I selected 9806 because I came across the following "Directors – NACE code 9806 should be used where either PAYE or directorship is the only source of income. For all other types the NACE code should indicate the main source of self-employed income."
Is that the correct code? I am PAYE.

For expected turnover, I basically used my salary.

Am I on the right track? Or making a mess of it.

 

[torblednam]

Thank you once again.

Trying to register now, have gone to Tax Registrations in Manage My Record.

For date business activity commenced, should I use 01.01.2019? Yes
For business description I put in Individual/PAYE, is that ok? If this is free text rather than a drop down menu, then you should say Share Options (or RTSO). If it's a drop down menu, just pick whatever fits best.
For NACE code I selected 9806 because I came across the following "Directors – NACE code 9806 should be used where either PAYE or directorship is the only source of income. For all other types the NACE code should indicate the main source of self-employed income."
Is that the correct code? I am PAYE. Yes

For expected turnover, I basically used my salary. This should be nil, if that doesn't trigger an error message. Only a trader will have a turnover

Am I on the right track? Or making a mess of it.

Answers in bold above ^^^

 

[JimmyCorkhill]

Answers in bold above ^^^

Thank you again

I have completed the steps as per your advice. The message I got was "As you are designated a mandatory eFiler, you will need to register for ROS in order to file and pay your Income Tax. Please allow three working days for your Income Tax registration to update on all Revenue systems. You can then register for ROS through Revenue.ie"

So I will wait a few days and then proceed to carry out the instructions as per your post in post 2.

Forgot to mention, that the company does not deduct tax at source. It gave a list of countries that if you are employee there they do deduct at source but for Ireland they don't seem to.
Also I spoke with a colleague who said a couple of years ago he got contacted by Revenue about not having paid his taxes on the discount.

 

[relax carry on]

Thank you again

I have completed the steps as per your advice. The message I got was "As you are designated a mandatory eFiler, you will need to register for ROS in order to file and pay your Income Tax. Please allow three working days for your Income Tax registration to update on all Revenue systems. You can then register for ROS through Revenue.ie"

So I will wait a few days and then proceed to carry out the instructions as per your post in post 2.

Forgot to mention, that the company does not deduct tax at source. It gave a list of countries that if you are employee there they do deduct at source but for Ireland they don't seem to.
Also I spoke with a colleague who said a couple of years ago he got contacted by Revenue about not having paid his taxes on the discount.

The sooner the better you do it. The interest rate for late RTSO is higher than normal Income tax and applies from the date the RTSO should have been paid. Doing it this way may mean there's no interest charged. If Revenue come looking at a later date in a compliance intervention interest would apply.

 

[Paul O Mahoney]

Is the scheme not revenue approved?
Loads of companies have this type of scheme and your share purchases come off gross salary and you must hold onto the shares for 3 years, then pay CGT on any gain using the 15% discounted purchase price as your buying price.

If its not approved by Revenue ignore this post.

 

[losttheplot]

Is the scheme not revenue approved?
Loads of companies have this type of scheme and your share purchases come off gross salary and you must hold onto the shares for 3 years, then pay CGT on any gain using the 15% discounted purchase price as your buying price.

If its not approved by Revenue ignore this post.

My company has two schemes, one as you describe. Shares are purchased at market value and must be held for 3 years to avoid income tax.
The other scheme we have is as the OP described. Deducted from net pay, 15% discount with RTSO due within 30 days. Payroll don't deduct the tax for us.

 

[Paul O Mahoney]

My company has two schemes, one as you describe. Shares are purchased at market value and must be held for 3 years to avoid income tax.
The other scheme we have is as the OP described. Deducted from net pay, 15% discount with RTSO due within 30 days. Payroll don't deduct the tax for us.

OK well thats news to me and thanks, my experience with the RTSO would be options granted free, but held for 3 years and on sale fill in Rtso and file and pay within the 30 days.
My memory isn't great but I thought there were 2 options available to people who are given these types of "options " but honestly can't remember the details

 

[JimmyCorkhill]

Is the scheme not revenue approved?
Loads of companies have this type of scheme and your share purchases come off gross salary and you must hold onto the shares for 3 years, then pay CGT on any gain using the 15% discounted purchase price as your buying price.

If its not approved by Revenue ignore this post.

Hi, no there is no requirement to hold onto the shares for 3 years. I know some employees when they receive the shares sell them straight away.

I think they may have a program for more senior people in the company around holding onto the shares for 3 years.

I read up more on the policy within the company on the ESPP and it mentions it it country dependant on how the tax is treated. There are generally two options to withhold the tax 1) Share Withholding and 2) Payroll Withholding but again it is country dependant whether they are even options.

I ran a report on the contributions and purchase of the shares and there is definitely no Share Withholding and I don't think there is a payroll withholding. In my payslip, I see a deduction each month of a % of my salary attributed to ESPP, which is used to purchase the shares.

On a separate note, Tax Registrations which I filled out yesterday is no longer an option in Manage My Records, does that mean my registration has gone through, or would it still be in process & I will receive some sort of notification?

Thanks

 

[Paul O Mahoney]

Hi, no there is no requirement to hold onto the shares for 3 years. I know some employees when they receive the shares sell them straight away.

I think they may have a program for more senior people in the company around holding onto the shares for 3 years.

I read up more on the policy within the company on the ESPP and it mentions it it country dependant on how the tax is treated. There are generally two options to withhold the tax 1) Share Withholding and 2) Payroll Withholding but again it is country dependant whether they are even options.

I ran a report on the contributions and purchase of the shares and there is definitely no Share Withholding and I don't think there is a payroll withholding. In my payslip, I see a deduction each month of a % of my salary attributed to ESPP, which is used to purchase the shares.

On a separate note, Tax Registrations which I filled out yesterday is no longer an option in Manage My Records, does that mean my registration has gone through, or would it still be in process & I will receive some sort of notification?

Thanks

On the last paragraph, we've never gotten any receipt or acknowledgement for all the Rtsos we have returned. I do include the figures on the form 11, for example we sold options in 2019 and paid the tax, and that doesn't show up on the online information on Ros.

So, we have decided to adopt the position that we know its right and if they ask we can provide backup and proof.

It really gets me that not a receipt or acknowledgement is issued.

 

[JimmyCorkhill]

**Update**

Finally got a RAN Key in the post, so just registered fully with ROS for Income Tax.

I have selected to file a Form 11 for 2019, it seems some of the details around my 2019 salary, taxable income etc have been pre-populated.

There is a section PAYE/BIK/Pensions (2) and within it there is a section Share Options exercised, released or assigned in 2019. Two fields to fill in here
1. Enter total chargeable amount
2.Enter the amount of Relevant Tax on a Share Option (RTSO) paid

Is the total chargeable amount the full discount you received? or is it the amount of TAX/PRSI/USC you should pay on it?
For part 2 where it says enter the amount paid, if I have not paid, should I input zero or do input the amount I should have paid?

Thanks

 

[JimmyCorkhill]

Gentle bump in the hope someone can advise

 

[Paul O Mahoney]

**Update**

Finally got a RAN Key in the post, so just registered fully with ROS for Income Tax.

I have selected to file a Form 11 for 2019, it seems some of the details around my 2019 salary, taxable income etc have been pre-populated.

There is a section PAYE/BIK/Pensions (2) and within it there is a section Share Options exercised, released or assigned in 2019. Two fields to fill in here
1. Enter total chargeable amount
2.Enter the amount of Relevant Tax on a Share Option (RTSO) paid

Is the total chargeable amount the full discount you received? or is it the amount of TAX/PRSI/USC you should pay on it?
For part 2 where it says enter the amount paid, if I have not paid, should I input zero or do input the amount I should have paid?

Thanks

The amount chargeable is your profit, whatever that is, if paid nothing don't enter anything and then go to the tab calculate and you will see what you need to pay.
Make sure all your details are right and if you have medical expenses not covered by insurance claim them and if you have dividends get those in too.

You'll be sucking diesel then

 

[Paul O Mahoney]

The amount chargeable is your profit, whatever that is, if paid nothing don't enter anything and then go to the tab calculate and you will see what you need to pay.
Make sure all your details are right and if you have medical expenses not covered by insurance claim them and if you have dividends get those in too.

You'll be sucking diesel then

And check those figures that are pre populated and check that what was deducted by way of tax, prsi, Usc matches your final pay check

 

[JimmyCorkhill]

The amount chargeable is your profit, whatever that is, if paid nothing don't enter anything and then go to the tab calculate and you will see what you need to pay.
Make sure all your details are right and if you have medical expenses not covered by insurance claim them and if you have dividends get those in too.

You'll be sucking diesel then

Many thanks Paul, I have followed it as best as possible right through to the end. Also I checked what was in the pre-populated fields with my final payslip and it seems to match. A couple of questions

1. There is a section in the Form 11 on pension, I am in the company pension plan and deductions are taken from my salary each month and matched by the company. It was not clear to me whether I needed to fill in anything under the pension section in the Form 11. Is there a requirement?

2. Total tax credits for me for the year should be 3,500 (Personal, PAYE and Medical Insurance Tax credits = €1,650,€1650,€200). I actually only received tax credits of €3,381 during the year, presumably due to some underpayment the previous year. The form 11 is showing tax credits of €3,500 for the year but I didn't get them, should I amend it somewhere to bring it in line with €3,381?

3. The income tax balancing amount is showing at just under €400 that I owe. for 2019. It is asking me to enter a figure for 2020 Preliminary Tax, I can input 0. But it gives me a warning as if it is wrong. My 2020 total tax could be around €10k or so, do I input that figure? I presume I don't have to pay that now though? As the tax would have been deducted from my salary throughout 2020 or is the preliminary tax for additional items like Share Options in 2020 I think I need to pay tax on?

Thanks very much again

 

[Paul O Mahoney]

Many thanks Paul, I have followed it as best as possible right through to the end. Also I checked what was in the pre-populated fields with my final payslip and it seems to match. A couple of questions

1. There is a section in the Form 11 on pension, I am in the company pension plan and deductions are taken from my salary each month and matched by the company. It was not clear to me whether I needed to fill in anything under the pension section in the Form 11. Is there a requirement?

2. Total tax credits for me for the year should be 3,500 (Personal, PAYE and Medical Insurance Tax credits = €1,650,€1650,€200). I actually only received tax credits of €3,381 during the year, presumably due to some underpayment the previous year. The form 11 is showing tax credits of €3,500 for the year but I didn't get them, should I amend it somewhere to bring it in line with €3,381?

3. The income tax balancing amount is showing at just under €400 that I owe. for 2019. It is asking me to enter a figure for 2020 Preliminary Tax, I can input 0. But it gives me a warning as if it is wrong. My 2020 total tax could be around €10k or so, do I input that figure? I presume I don't have to pay that now though? As the tax would have been deducted from my salary throughout 2020 or is the preliminary tax for additional items like Share Options in 2020 I think I need to pay tax on?

Thanks very much again

On point 3 you only return your non Paye income and pay 90% of that but your 2019 figure is very small you need to pay 90% of any income generated .

 

[Iri2903]

Hi,

I have taken part in an ESPP in work in the last couple of years. Deductions are taken from my payroll each month and twice a year, shares are purchased in the company at a 15% discount.

I incorrectly believed the tax to be paid on the discount was being withheld by payroll but it turns out it is not, so I owe for tax and probably interest.

For 2019 & 2020, I have received 4 rounds of shares where I have not paid any tax on the discount. I have yet to sell the shares but received the discount.

The latest round of shares I received was on November 1st, so I still have time to submit an RTSO1 form for these shares as it is within 30 days.

My question is on the previous 3 rounds of shares I received (May 2019, Nov 2019, May 2020). Should I still submit an RTSO1 form for each of these periods as well? And then wait till the revenue come back to me with an interest charge? I don't see anywhere on the RTSO1 form to add an interest payment.

Or if I need to calculate the interest myself, is there a different interest rate for IT v USC/PRSI?

I also have to submit my Form 12 for 2019, am I correct in thinking there is nothing on the Form 12 I need to input in relation to the above?

I do believe I need to fill in a Form 11 for 2019 but have possibly missed the deadline, can anyone confirm if this is the case? (I have never filled in a Form 11 before to the best of my knowledge but believe I may have to because of the RTSO1.)

Any advice is greatly appreciated.

Thanks

Hi everyone,

I am in the same position of JimmiCorkhill! I mean I believed my ESPP was an approved scheme so I never made a payment by RTSO1 for 2019 and 2020.

Is there a way to restore that situation paying taxes now?

I suppose for 2020 I'm still in time to declare it by ROS tax return of this year.

My concern is about 2019. How can I do for it?

I have always used PAYE service for previous years. Now I am requesting for ROS.

Thanks to everyone for any support!