What are employment related securities?
In broad terms, ERS are any securities (e.g. shares, share options etc.) which are provided to someone by reason of their past, present or future employment. This legislation is very widely drafted and can apply in many situations, sometimes without intention. In addition, there are various exemptions to this so please do get in touch for further advice, if required.
What is ERS reporting?
This is an online return, submitted to HMRC by the company, which discloses various transactions relating to ERS.
The ‘Other’ ERS return was previously referred to as the ‘Form 42’.
What transactions are reportable for ERS reporting purposes?
Reportable ERS events are not just limited to those which have triggered a tax liability. Any transaction involving securities should therefore be considered.
Some common examples of transactions which may need to be reported are:
Share issues
Share transfers
Share options – grant, exercise or lapse etc. (tax advantaged arrangements such as EMI have their own version of the ERS annual return)
Share for share exchange, for example on the introduction of a holding company
Changing the rights attached to shares so more value is ‘shifted’ to a shareholder
This list is certainly not exhaustive so please get in touch should you have any queries.
When does the annual return need to be filed?
The annual reporting is due for online submission to HMRC by 6 July following the end of the tax year. Therefore, for the 2021/22 tax year from 6 April 2021 to 5 April 2022, the return would be due by 6 July 2022.
This is the same online submission deadline as for Forms P11D.
Both ‘Other’ ERS returns, and annual returns for tax advantaged share schemes (such as the EMI annual return), have the same submission deadline of 6 July.
Failure to report can trigger late filing penalties as follows:
| Miss the annual filing deadline | £100 penalty |
| 3 months late | £300 penalty |
| 6 months late | £300 penalty |
| 9 months late | £10 penalty per day |
If the annual return fails to be filed, or the return contains a material inaccuracy that is careless or deliberate, or is not corrected after you become aware that it contains a material inaccuracy, HMRC have discretion over penalties charged and this could be up to £5,000.
How do you file a return?
ERS reporting is completed via an HMRC Government Gateway account, specifically the account which has access to ‘PAYE for Employers’ services.
A new scheme can be registered to facilitate reporting. This can take a couple of weeks to action so it is better to start thinking about this reporting sooner rather than later.
Your accountant should be able to assist with your reporting, if required. Lovewell Blake has a team who regularly assist companies with this reporting.
Once all filings are completed, don’t forget to close down your ERS scheme!
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