The deadline for filing your annual employment related securities ("ERS") return for the 2024/25 tax year is 6 July 2025.  Transactions involving ERS that have occurred within the tax year ended 5 April 2025 may be required to be reported via the HMRC online portal on or before 6 July 2025.

What is an employment related security ("ERS")?

ERS are broadly securities that have been acquired or deemed for tax purposes to be acquired by reason of an employment. Securities can include shares, share options, loan notes and debt instruments such as debentures.

The deeming provision means that many employees and directors who hold shares in their employer group have acquired ERS even if they do not consider those securities to have been acquired by reason of employment.

Any new ERS schemes must be registered on the HMRC online portal. Such schemes include one-off awards of shares or other securities to employees and/or directors. You will need to register the ERS scheme before you can submit an ERS annual return, you should therefore ensure you leave sufficient time to register before the 6 July deadline.

What is a reportable event?

If there have been any arrangements involving securities held by your employees, you should consider carefully whether a report needs to be made.

Common reportable events include:

  • The acquisition of shares or other securities by employees and/or directors
  • The grant and exercise of share options
  • The disposal of shares or other securities for more than market value
  • Changes of any rights and/or restrictions of securities
  • The grant of options under an Enterprise Management Incentive ("EMI") plan

If you are an employer operating an ERS scheme but there have been no reportable events, you must submit a 'nil return'.

Enterprise Management Incentive ("EMI") notification

EMI share options are a tax efficient way of offering employees an option to buy shares in a company at a later date. Provided the conditions for EMI treatment are met, employees will benefit from tax savings on the exercise of their EMI options.

The grant of EMI options should be notified to HMRC as soon as possible following their grant, and at the latest by 6 July following the tax year in which they were granted. If the EMI options are not notified in time, they will cease to be EMI options, losing the beneficial tax treatment that comes with it.

The EMI options are notified directly through HMRC's PAYE online service (where options were granted to 30 employees or less), or otherwise by completing and submitting a notification form to HMRC.

Penalties for late reporting

Failure to file an annual return on time will result in penalties. The penalties will be as follows:

  • Automatic £100 penalty if submitted after 6 July;
  • Further £300 penalties if the return remains outstanding after three and six months;
  • Penalties of £10 a day may be charged for returns that remain outstanding nine months after the deadline.

How Brodies can help

If you have any questions in relation to the matters discussed in this article or would like to hear more about your ERS reporting duties, please contact one of our corporate tax lawyers.

Contributors

Karen Davidson

Partner

Charlie Mackenzie

Solicitor