Employment-related securities | End-of-year reporting to HMRC

Companies operating employment-related securities arrangements are reminded that they must submit their annual returns for the tax year ending 5 April 2024 by 6 July 2024.

What are employment-related securities?

Employment-related securities (ERS) arrangements include:

• Tax-advantaged plans. Enterprise Management Incentive (EMI) options, Company Share Option Plan, Share Incentive Plan and Save As You Earn (SAYE) Plan.
• Non-tax advantaged ERS arrangements. This is widely drawn and will broadly include any employee and/or director shares and options, whether acquired under an employee share plan or otherwise.

The UK Supreme Court's judgment in the Vermilion case last year clarified that, where an employer awards shares or options to an employee or director (including a non-executive director), the deeming provision in the legislation brings them into the ERS regime (regardless of the employer's reasons for making the award). It is important that companies include all such awards in their ERS annual returns.

Companies operating ERS arrangements have an obligation to:

• Register any new schemes established within the 2023/24 tax year by 6 July 2024. This process can take up to 10 days, so it is important to allow time for registration to enable companies to meet the annual returns deadline.
• File annual returns containing the information required by HMRC for the 2023/24 tax year by 6 July 2024. This includes making the important declarations of compliance for any tax-advantaged plans.

This must be done online using HMRC’s Employment Related Securities Service.

Where can I find the templates?

The templates for use from 6 April 2024 are available at employment-related securities return templates and forms, and further information is available on HMRC’s Employment Related Securities Service.

Late filing will trigger automatic penalties from HMRC and will have particularly serious consequences for tax-advantaged plans.

Osborne Clarke comment

There are a number of practical points for companies to note.

• There are separate templates to use for each type of tax-advantaged plan, and the “other” template should be used for arrangements which are not tax-advantaged.
• The relevant share scheme reference number should be included, if available.
• Where there have been no reportable events, a nil return must be submitted;
• Where a scheme has ceased, employers should record the final event date on the ERS online service and file a return for that year;
• It is important to take screenshots of all the information uploaded to HMRC, for the company’s records.

Please get in touch with your usual Osborne Clarke contact or one of the experts below if you have any queries or would like to discuss further.