Compliance & Deadlines for Employment Related Securities

Compliance & Deadlines for Employment Related Securities

The deadline for reporting gifts and awards of shares and other similar securities in companies, acquired by reason of employment, also known as employment-related securities (ERS), is approaching on July 6th. It is crucial for business owners to stay updated on the requirements and changes surrounding legislation and reporting to ensure compliance and avoid penalties.

What are employment-related securities?

ERS, which includes various elements such as EMI schemes, debentures, options, and futures, are becoming increasingly common in the workplace. They play a significant role in rewarding, retaining, and incentivising employees. However, it is important for business owners to understand how these schemes could impact their businesses and take the necessary steps to comply with reporting obligations.

To meet compliance requirements, all new ERS schemes, including one-off awards or gifts of shares, must be registered on HMRC Online Services. It is particularly important to register tax-advantaged schemes by the July 6th deadline following the tax year in which they were established. Employers utilising Enterprise Management Incentives (EMI) schemes must inform HMRC about the grant of an EMI option within 92 days from the grant date.

When are reporting deadlines?

Failure to submit the end-of-year ERS return, including nil returns when applicable, by the July 6th deadline will result in penalties. An automatic £100 penalty is imposed for late submission, with additional penalties of £300 if the return remains outstanding three months after the deadline, and a further £300 if it remains outstanding six months thereafter. Even if the initial penalty has been paid, employers must still submit an end-of-year or nil return to fulfil their filing obligations.

Separately to the July 6th deadline, you must also inform HMRC about the granting of any EMI share options by submitting an EMI notification within 92 days following the date of the grant. Failure to do this within 92 days could risk you losing any tax benefits for you and your employees.

What changes do I need to be aware of?

Changes to Enterprise Management Incentives (EMI):

 Business owners should be aware of recent changes. The requirement to specify share restrictions in EMI option agreements has been eliminated, even for options granted before April 6, 2023. However, employees should still be aware of the terms, including restrictions, before entering into an option agreement. Additionally, employers are no longer obliged to declare an employee's signing of a working time declaration when issuing an EMI option.

From April 6th 2024, you will have until July 6th to notify HMRC of any EMI options issued in the previous tax year.

At Haines Watts, we’re here to help

At Haines Watts, we understand the complexities of reporting Employment-Related Securities and are committed to assisting business owners like you in navigating the process and ensuring deadlines are met. If you require our support our experienced tax team are ready to lend a helping hand.