The deadline for filing your annual ERS return for the 2020/21 tax year is 6 July 2021. Make sure you know what needs to be reported.

What is ERS reporting?

Certain transactions involving employment related securities (ERS) require to be reported annually to HMRC by the employer company. ERS are broadly securities (such as shares) or interests in shares (such as options) provided to someone by their employer or by reason of their employment.

What events are reportable?

The most common reportable events are:

  • The acquisition of shares by employees (including directors). This includes further acquisitions by employees who are already shareholders. It also includes further subscriptions by founders, despite their initial subscription often not being reportable.
  • The grant and/or exercise of options over shares.

Other events which could result in a reporting requirement include certain variations of share capital, share buybacks where this could impact the value of employee shares and disposals for more than market value.

Reportable events are much wider than events which have triggered a tax liability. If there have been any arrangements involving securities held by your employees, you should consider carefully whether a report needs to be made.

When does an annual return need to be filed?

You will need to file an annual return by 6 July 2021 if a reportable event has occurred in the 2020/21 tax year (i.e., between 6 April 2020 and 5 April 2021).

If an event has previously been reported and there has been no change in the tax year, a 'nil' return will still need to be filed.

Note that the grant of tax advantaged EMI options must be reported within 92 days of grant. An annual report must also be filed for the same and subsequent tax years.

Failure to file an annual report on time can result in penalties. For EMI options, failure to notify HMRC of the grant within 92 days will result in the loss of beneficial tax treatment.

How do you file a return?

ERS reporting is made through HMRC's online portal, which is the same portal used for payroll filings.

If you have a payroll agent, they should be able to make the reporting on your behalf.

If you do not have a Government Gateway user ID or have not previously registered the scheme to which the reportable event relates, you should ensure you leave sufficient time to register.