Deadline approaching for employee share plan reporting

By 6 July 2022, employers must file their annual ‘employment-related securities’ (ERS) returns with HMRC for the 2021/22 tax year.

This applies to:

• Companies in the UK and elsewhere who have granted share options to UK employees between 6 April 2021 and 5 April 2022;
• Companies that operate an employee share plan or arrangement.

Requirements:

Companies need to submit their returns via the HMRC ERS online service.

Therefore, by Wednesday 6 July, you need to have:

• Registered for the service;
• Registered each share plan or arrangement;
• Self-certified any UK tax-advantaged plans; and
• Reported each share award grant and share acquisition that occurred during the reporting period.

You must register all new ERS schemes with HMRC, including one-off awards or gifts of shares. ERS rules can also apply even if there is no formal employee share plan in existence (for example, share acquisitions and disposals, overseas plans with UK participants and those that carry interest arrangements).

It is also important to note that nil returns are required for all inactive plans until you have notified HMRC that the plan has ceased through the ERS online service.

Non-tax advantaged schemes:

These only need to be considered if there’s a reportable event, for example acquiring or disposing of securities, or assigning or releasing securities options.

Penalties for non-compliance

Failure to file these returns on time will result in an automatic penalty of £100 per plan, and any benefits from tax-advantaged plans may be lost. Additional penalties will arise where submissions remain outstanding. These are as follows:

• An additional £300 if not filed by 6 October 2022
• An additional £300 if not filed by 6 January 2023
• Further penalties will apply to any returns that remain outstanding after 6 April 2023.

In addition to penalties, a failure to register a tax-advantaged plan will affect the tax treatment of future participants (and additionally, in the case of CSOPs, current participants).

What you need to do now…

You should consider whether any transaction by employees or directors which involves shares, options or other securities needs to be reported.

This also ensures the arrangements remain compliant with legislative changes and that they are achieving their intended purpose.

We also recommend you register for the ERS service as soon as possible.

If you have any questions or need assistance filing your share returns, contact our Tax Advisory team.