If you operated an employee share plan or arrangement during the 2024/25 tax year, now is the time to start thinking about your annual employee share plan reporting obligations. Annual returns for the last tax year must be filed online with HM Revenue & Customs (HMRC) by 6 July 2025 and are due in respect of all the employee share plans or arrangements you had in place during that period, even if there has been no activity.
The filing process can be time-consuming and tricky to navigate so the sooner you start it the better. If you need help in dealing with your returns, please get in touch with a member of the Travers Smith Incentives Team.
Points to note:
- 6 July 2025 is a hard deadline, and an initial penalty of £100 will be due if a return is just one day late. Note that the deadline falls on a Sunday this year so we recommend you ensure HMRC has everything it needs from you by Friday 4 July at the latest.
- Remember, companies will not receive a reminder from HMRC to file their returns so don't wait for one! It is a good idea to have a back-up administrator for your Government Gateway account in case the main administrator has left the company or is away. To set up a backup administrator, all you need to do is log into your HMRC business tax account and follow the guidance to add a team member.
- You must submit a return in respect of each share plan registration. If there was no activity in the 2024/25 tax year (for example, no new grants), you must complete a nil return.
- You need to make a return in respect of all your share plans and arrangements (tax-advantaged and non tax-advantaged) whether or not they were put in place with a formal set of plan rules. These include the grant of options to (or acquisition of shares and other securities such as loan notes or carried interest by) employees and directors (including non-executive directors). As well as UK employees, you may need to make a report in respect of non-UK employees with UK duties.
- Before you can make an annual return, your share incentive arrangement or plan must be registered with HMRC under the ERS online service (part of the HMRC PAYE online service). If you aren't sure whether an arrangement is already registered, you can check by going to the "view" tab in your ERS online account (through your PAYE online portal). Note that the registration process can take a few days.
- All your non tax-advantaged arrangements and plans can
be registered under a single reference number and a return
submitted on the "other" template. In contrast,
each of the tax-advantaged plans (CSOP, SAYE, SIP and EMI)
must be registered and reported separately. The deadline
for notifying EMI options granted since 6 April
2024 has been brought in line with the other tax-advantaged plans.
However, given the tax benefits at stake if they are not notified
in time, we encourage companies to continue to notify HMRC of EMI
options as soon as possible after they are granted. The EMI
notification template remains a separate document to the annual
return form.
You can access the HMRC templates and guidance here:
https://www.gov.uk/government/collections/employment-related-securities-detailed-information#end-of-year-return-templates-and-forms
- Your return will be rejected if it contains formatting
errors, so it is a good idea to take advantage of the HMRC
checking service before submitting your return. A link to this
service can be found here:
https://www.gov.uk/guidance/spreadsheet-checking-service-employment-related-securities-ers.
Note that leaving gaps between lines can lead to information not being captured.
- The sale of shares or securities by your employees and directors and the cancellation or exchange of awards may also need reporting. Take advice if you aren't sure as HMRC can charge a penalty of up to £5,000 if a return contains a material inaccuracy.
- Before you submit your returns, you should save a copy for your own records. Take screenshots of each page before submitting and save them together with a copy of the confirmation page. This is because the HMRC online service won't save these details and you won't be able to access them again.
Further information about the process for registering your share plans can be found here: https://www.gov.uk/guidance/tell-hmrc-about-your-employment-related-securities
Guidance on submitting your returns can be found here: https://www.gov.uk/guidance/submit-your-employment-related-securities-ers-return
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.
