Reporting deadline draws near for employment related securities

Employers must report to HMRC annually any events that occur in relation to what are called ‘Employment Related Securities’ – these are in simple terms any shares or other securities that are acquired by reason of employment (by way of share option or directly).

The deadline for the 2023/24 tax year is 6 July 2024.

Key points to remember:

1. Nil returns– if you have previously reported employment related securities or registered share plans with HMRC, you will need to file even if nothing has happened in the tax year. Many companies fail to do this and find themselves with a fixed penalty to pay.
2. Registering a new plan – for all new share plans, even just a one-off acquisition of shares, you need to register online. You will need to give HMRC a good few days to give you a registration number so do not leave this too late.
3. Verify certain approved plans – any tax-favoured plans such as Share Incentive Plans, Save As You Earn plans, Company Share Option Plans and Enterprise Management Incentive Options have to be verified as compliant with the relevant plan legislation.
4. All reportable events – you need to report all relevant acquisitions of shares (and other securities), options and certain sales relating to your employees and directors.

HMRC automatically fine companies £100 for being late, even for nil returns. There can be additional £300 penalties for every three months’ delay and then an extra £10 per day after 9 months. There can be additional penalties for inaccuracies.

Note that there are no reporting requirements per se for shares issued to directors (or family members of directors) on incorporation of the issuing company (or upon transfer of those shares from a formation agent), but only for so long as the shares were issued at nominal value only, no other form of securities are then being acquired, and the shares are not being acquired by reason of employment otherwise than by the issuing company (noting that directors of UK companies are employees for UK tax purposes).

This Insight piece was written by Jeremy Glover. Please do get in touch if you have any ERS-related queries.  Our team at Humphreys is able to advise you on your ongoing compliance obligations in relation to any employment related securities generally.

All the thoughts and commentary that HLaw publishes on this website, including those set out above, are subject to the terms and conditions of use of this website.  None of the above constitutes legal advice and is not to be relied upon.  Much of the above will no doubt fall out of date and conflict with future law and practice one day.  None of the above should be relied upon.  Always seek your own independent professional advice.

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