Businesses that award shares, options or other securities to UK employees, directors or officer holders need to be aware of the July 6 deadline to submit an Employment Related Securities (ERS) annual return to HM Revenue & Customs (HMRC). The requirement covers any form of equity incentive, such as restricted or unrestricted shares, growth shares, share options and other forms of share awards and securities.
Companies do not need to register or report on share awards made to non-employees / non-directors in the UK such as consultants or contractors where the awards are not in connection with a past or future employment / directorship, or to employees outside the UK who had no UK duties throughout the relevant period. Awards made to Employer of Record employees need to be reported, usually by the Employer of Record employer.
Companies should be aware:
- Even one-off share awards, such as the grant of restricted shares to a director, are considered a "scheme" and needto be registered with HMRC online (via the PAYE portal).
- If you have not yet registered an ERS scheme with HMRC, you should do so now to allow time to submit an annualreport by July 6.
- You will also need to self-certify that tax-favoured share plans (including Enterprise Management Incentive (EMI) andCompany Share Option Plans) meet certain requirements.
- It is very important to take screenshots of every page of the HMRC end of year reporting process and for all otheractivity on HMRC online, particularly the notification of EMI option grants, and for these screenshots to be kept withthe company's records.
For each registered ERS scheme, companies must submit annual returns covering all reportable equity incentive activity between 6th April 2024 and 5th April 2025, including the grant, exercise, cancellation for consideration and the acquisition of shares. If no activity has occurred, companies must still file a "nil" return for each of their schemes. Automatic penalties apply for late filings. A company can also face penalties for any material inaccuracies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
