Annual returns for share-based employee incentives deadline: 6 July 2026

If your business operates share-based employee share schemes, such as EMI or other share option schemes, or has issued shares to employees, it’s your responsibility to file annual Employment Related Securities (ERS) returns. HMRC does not issue reminders, and penalties can apply where there are compliance failures.

When do you need to file the return?

Registration deadlines depend on the type of arrangement. For tax-advantaged schemes, HMRC says new schemes should generally be registered by 6 July following the end of the tax year in which they were set up. For non-tax-advantaged arrangements, registration is generally needed where there has been a reportable event, and HMRC says these arrangements should be registered by 6 July following the tax year in which the first reportable event happened.

Once a scheme or arrangement has been registered, an annual return must then be submitted online to HMRC between 6 April and 6 July following the end of the relevant tax year, every year, even if there has been no reportable event and only a nil return is due.

Are there any penalties?

Yes. There are penalties for late filing of annual returns, and HMRC can also charge penalties where a return contains a material inaccuracy. Missing registration deadlines can also cause practical problems and, for tax-advantaged arrangements, may put tax advantages at risk.

HMRC applies a £100 automatic penalty if an end-of-year return or nil return is not submitted by 6 July. If the return is still outstanding three months after the original deadline, HMRC applies a further automatic penalty of £300. If it is still outstanding six months after the original deadline, there is another automatic penalty of £300. If it remains outstanding nine months after the original deadline, HMRC may impose further penalties of £10 a day. Paying the penalty does not remove the filing obligation - the return or nil return must still be submitted.

HMRC can also impose a penalty of up to £5,000 for a material inaccuracy in a return if, after a compliance check, it decides the return contains a material inaccuracy and the company has not sent an amended return, or the inaccuracy was careless or deliberate. Once a company identifies an inaccuracy, it should amend the return without delay.

What do you need to report?

Matters that need to be reported vary depending on the type of arrangement, but can include:

1. The grant of share options (subject to the separate EMI notification requirements below) or the acquisition of shares by employees, including directors and non-executive directors;
2. The exercise of options – for example, if an option holder has exercised some of their options in the tax year;
3. The release, lapse, cancellation, or receipt of any benefit in respect of options – for example, if an employee leaves the company to work elsewhere, options will often lapse, or some companies may cancel and regrant options and this will need to be reported;
4. An exchange, or rollover, of tax-advantaged options, such as EMI options –this can apply on a company takeover where option holders exchange their options into the acquiring company;
5. An adjustment of options – for example, if the company has undertaken a share subdivision, this may affect the number of options and will need to be reported;
6. Post-acquisition chargeable events – in respect of shares held by employees, such as an enhancement in value or sale at over-value; and
7. Nil returns – if the company has a registered share-based employee share scheme or arrangement and there is no activity during a tax year, it must still submit a nil return. If the scheme has ended, the company should also make sure the final event date is recorded with HMRC and submit a return or nil return for the tax year in which that final event date falls.

Are there any changes to reporting requirements?

For EMI options granted on or after 6 April 2024, the notification deadline is now on or before 6 July following the end of the tax year in which the grant is made. For EMI options granted before 6 April 2024, the old 92-day notification deadline still applies. As part of this year’s compliance process, if you have granted EMI options, you should check both your annual return position and that any EMI notifications have been made on time.

We're here to help

If you require assistance with your ERS annual return, or you’re considering setting up a share incentive scheme, get in touch with our team of employee share schemes solicitors today. We can also help you set up a share scheme, from checking whether your business qualifies for EMI and supporting valuation discussions with HMRC, through to planning and drafting share scheme rules and award agreements.