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May 26, 2023

Employment Related Securities Tax Return Deadline: 6 July 2023

The 06 July 2023 deadline for employers to file their annual Employment Related Securities (ERS) Returns is fast approaching.

If you are an employer and you operate an Enterprise Management Incentives (EMI) Scheme or an Employment Relates Securities (ERS) Scheme, you will need to file an EMI or ERS return by 6 July after the tax year end. For the tax year ended 5 April 2023, the deadline is 6 July 2023.

When is a return required?

Where a ‘reportable event’ takes place, there is an obligation for an employer to register its share scheme and ERS events with HMRC via their online portal.

The employers do not need to have a formal share scheme in place to fall within these reporting requirements and can even bring into scope transactions that are one-off events. Where shares/securities are located outside the UK, these can potentially still be caught by these registration and reporting rules. Due to its large scope, many companies are unaware of their annual ERS compliance obligations with HMRC.

Employers should therefore get the necessary tax advice when determine whether the activities involving UK employees/directors and the acquisition of shares, options and other securities, will require them to file an ERS return. Certain exemptions are available so this should be examined to save the administrative burden.

Where a share or share option scheme has been registered with HMRC (such as an EMI Share Option Scheme), the employer will need to file annual returns, even if no reportable events have taken place. This is in place until the scheme has been de-registered and formally closed.

What is reportable?

As described above, the ‘reportable events’ are wide-reaching. Further details on what is meant by ‘Employment Related Securities’ can be found in our previous blog here. In addition, details regarding the types of schemes that require reporting can be found here.

This could include (but is not limited to):

  • HMRC tax-advantaged plans (EMI, CSOP, SAYE/Sharesave and SIP);
  • Non-tax advantage share option schemes;
  • Share acquisitions and disposals;
  • Share-for-share exchanges;
  • Overseas plans with UK participants (e.g. RSUs, RSAs and ESPPs); and
  • Group re-organisations.

What Next?

If an employer fails to file their annual ERS Return by the 6 July following the end of the tax year, HMRC have the ability to issue automatic late filing penalties (starting at £100 per scheme). These penalties will increase until it is filed. Where HMRC find a material inaccuracy within the future, they can charge additional penalties.

Here at PD Tax, we regularly assist our clients with carrying out a review of their business to determine their ERS reporting requirements and assist with filing the returns with HMRC. Employers should take extra care with these rules as there is a very short period to get these filed after the end of the tax year.

Where you have employees/directors of company that have acquired new shares in the tax year, and you are uncertain of whether a return is required, please contact a member of the team to see how we can help.

Disclaimer: This article is for general information only and is not intended to constitute individual advice. It is recommended that you seek independent tax advice.

Contact us today to discuss your tax requirements.
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