Offering employees equity-based incentives has become commonplace, but many employers are unaware how to report these complex transactions to HMRC.

What are employment related securities?

Reporting of employment related securities (ERS) applies to all types of share award. It is the duty of the employer to ensure an ERS tax return is filed.

The following are a few examples of the type of transactions that must be reported to HRMC:

•  An issue of shares
•  The granting and exercise of options
•  The exchanging of shares for new shares or loan notes
•  The disposal of shares for more than their market value

How to report

Businesses must firstly register any new ERS scheme with HRMC. Once registered, an ERS return will need to be filed for each tax year that the scheme remains active.

It is important to note that if employers have an active ERS scheme, but have not been party to any reportable transaction within the tax year, they must still submit a ‘nil’ return to HMRC.

The deadline for reporting ERS transactions taking place in the 2020/21 tax year is 6 July 2021. If the reporting deadline is missed, automatic penalties will be issued to the company for late filing.

How we can help

The ERS tax return is notoriously complicated and can result in significant penalties if notifiable transactions are missed.

Our tax specialists can provide advice on the need to register, as well as preparing and filing the ERS return. Contact us today on 01788 539000 or 0116 261 0061 to find out more.


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