Employment Related Securities: Don't forget to file your annual ERS return

As an employer, if you allow your employees to acquire shares, whether it’s as a one-off incentive, part of their employment package or if you set up a share option scheme, you must let HMRC know and file an annual ERS return.

Dated: 18 June 2018 Author: Alex Hutchinson, Corporate Tax

In most cases, any share transactions involving employees need to be reported.

One of the most common matters to report is when shares or share options are given to a director or employee. This doesn’t just apply to current directors and employees, it includes those who have been directors or employees in the past or may be employed in the future.

It’s important to note that HMRC is no longer issuing notices to complete ERS Returns. So, if you sent in an ERS Return last year, you’ll need to do the same this year. Even if there are no reportable events during the tax year, a nil return may still be needed to avoid penalties. An ERS Return for the year to 5 April 2018 must be filed with HMRC by 6 July 2018, so the deadline is looming. You can’t submit a return using the ERS Online Service unless you’re registered to use HMRC Online Services, so this is a priority if you’re not already enrolled.

Failing make a report on an ERS Return can result in a penalty of £300 per reportable transaction, plus daily penalties of £60; it can also affect your risk rating with HMRC, so it’s important to have the correct information and to file on time.

Need further assistance?

If you’re an employer that’s given shares to your employees and haven’t yet told HMRC, or if you simply want to discuss some of the finer points of the rules and regulations surrounding ERS, then please contact us on 0800 298 3899 or submit an enquiry via our contact us form.

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