Employee Share Schemes

An Employment Related Securities (ERS) return is required each tax year to record share issues or share option movements during the year to employees/directors or their family members.

If you operate an employee share scheme or have awarded shares to employees in the tax year to 5 April 2024, you will need to register your scheme online, and file an annual return in relation to the scheme with HMRC by 6 July 2024.

It is likely that you will have reporting obligations if any of the below apply to your business for the tax year:

Issued shares to employees/directors or the employees/directors family members
Granted share options to employees/directors or the employees/directors family members
Have an existing scheme or set up a new ERS scheme in the period
One-off transactions such as a director or employee acquiring shares by reason of their employment

In summary, companies with any type of employee or director share plan or incentive scheme are likely to be required to register plans and submit annual returns online. This includes Enterprise Management Incentive (EMI) schemes, non-tax advantaged schemes or awards, a Company Share Option Plan (CSOP), Save As You Earn Scheme (SAYE) or Share Incentive Plan (SIP).

No transactions

It is important to remember that you must file an annual return for any schemes registered on HMRC’s online service even if there have been no reportable transactions in the year. A nil return is required until a plan is formally closed on the HMRC system.

Avoid filing penalties

There are penalties for late filing and also for incorrect returns. It is therefore important that due care is given to the information to be reported.

Further information and guidance on submitting an ERS return can be found here.

Change to EMI notification for the tax year to 5 April 2025

For EMI options granted on or after 6 April 2024, it has been announced that the deadline for notifying the option grants to HMRC is extended from 92 days following grant to 6 July following the end of the tax year.

As such, an EMI option granted on 30 June 2024, for example, would only need to be reported through the EMI annual return for the tax year ended 5 April 2025 and by the deadline of 6 July 2025. Please note that the extension does not apply to EMI options granted in the current tax year (ending 5 April 2024) where the strict 92 day notification deadline still applies.

Financial statements

All of these types of schemes will have an associated accounting impact. A financial reporting valuation will be needed in order to derive a fair value as at the grant date, which is then spread over the vesting period in the financial statements. Note that this valuation differs to a tax valuation. Please get in contact if you require any support on this area.

Employee Share Schemes