Updated HMRC ERS annual filing guidance: the importance of retaining your share plan data 

If you’re a business with share incentive plans or arrangements, including one-off awards or gifts of shares to employees, directors and non-executive directors, you must register all new employment-related securities (“ERS”) schemes with HM Revenue & Customs (“HMRC”) and comply with annual filing obligations to avoid penalties. HMRC updated their guidance around this on 2 January 2024. 

What has changed and what do I need to know? 

It is critical to screenshot information which you submit to HMRC as part of your ERS reporting in order that you have a record of what you have submitted. You will need this information on a transaction to demonstrate ERS compliance. 

HMRC’s guidance has been updated to make explicit the requirement to save a copy of notifications and returns. This is because the Government’s online service will not save the details and you will not be able to access them again. 

It’s also worth noting that on October 25 2023, the Supreme Court made a landmark decision ruling in favour of HMRC in the HMRC v Vermilion appeal. This impacts the breadth of what share reward is employment-related and therefore what needs to be considered in relation to annual ERS filing obligations. 

I haven’t registered any new ERS schemes yet. When do I need to tell HMRC? 

New tax-advantaged schemes should be registered by 6 July at the latest following the tax year they were created. For Enterprise Management Incentives schemes (EMI), businesses should currently notify HMRC about a grant of an EMI option within 92 days of the date it was granted and this deadline is changing to 6 July following the tax year from 6 April. 

These new tax-advantaged share schemes cannot be registered after 6 July following the tax year in which they were implemented: 

• Share incentive plans 
• Save as you earn 
• Company share option plans 

It’s important to note that you only need to register schemes without a tax advantage when there’s a reportable event, e.g., acquiring or disposing of securities, or granting, assigning or releasing securities options. 

It’s mandatory that you file ERS returns every year until you cease the scheme, even if there is no reportable event or activity or you will receive a penalty. 

How do I register my new ERS schemes? 

It is your responsibility to file annual Employment Related Securities (ERS) returns. HMRC does not issue any reminders and penalties apply where there are compliance failures. The deadline for annual returns this year is 6 July 2024 - please see our separate update for further details here.

We can assist you with registering your ERS schemes with HMRC and with your annual filing requirements to keep you compliant. Get in touch with our team of employee share schemes solicitors today by calling us on 0800 689 1800 or by filling out the short enquiry form below.  

We can also help with checking whether your business qualifies for tax-advantaged share schemes which can be very valuable from a financial and retention perspective, agreeing valuations with HMRC for EMI and CSOP schemes and designing and drafting share scheme rules and award agreements.