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If an employer gives shares to an employee, or sets up a tax advantaged share or share option scheme, the benefit is taxed within the Employment Related Securities (ERS) regime. The employer will then have a requirement to register a share scheme with HMRC and file an annual return.

HMRC Employment Related Securities bulletin 31 (March 2019): the highlights

See ERS What's new? March 2019

HMRC Employment Related Securities bulletin 26 (March 2018): the highlights

HMRC's top ERS errors:

See ERS What's new? March 2018

HMRC Employment Related Securities bulletin 25 (September 2017): the highlights

HMRC Employment Related Securities bulletin 24 (June 2017): updates for 2016/17 returns

Reporting problems

Participating company information

Checking for errors

Not registered for PAYE?

ERS returns are not required if all of the following applies:

Schemes set up in error

To cease a scheme you should access the ERS service through the company’s PAYE for Employers account. There is no agent facility: this presents a problem if agents are required to assist employers who have enabled two factor authorisation.

Select ‘View schemes and arrangements’. You’ll need to scroll down to the bottom of your screen to view schemes and arrangements.

Select the relevant scheme. On the next screen provide a date of final event. To close an EMI scheme, after selecting the scheme select ‘End of year returns’ and then on the next screen select ’provide a date of final event’. This can be a date in the past, but remember that an annual return must be submitted for the tax year in which the final event date falls.

If you’re still not sure why a scheme was registered on ERS service you’ll need to speak to the Company Secretary or seek professional advice. Please note a scheme can only be registered by someone in the company who has access to the company’s HMRC online services account.

If you registered the scheme but there have been no reportable events or if you registered the scheme for a one-off transaction you can either: 

Penalties

Returns, including nil returns, must be submitted for any schemes registered on the ERS online service including:

HMRC says that once a scheme or arrangement has been registered on the service and remains live, you have a continuing annual obligation to submit an end of year return online by the deadline. The statutory deadline for returns is on or before the 6 July following the end of the tax year. A return is required even if you have:

Editor's note: It is doubtful that a return is in fact due if there is no reporting obligation i.e. if a scheme was set up in error, duplicated etc.

Appeals

If you wish to appeal against a late filing penalty you can write to HMRC at:

Charities, Savings and International 1 
HM Revenue and Customs 
BX9 1AU 

or by email: This email address is being protected from spambots. You need JavaScript enabled to view it. telling HMRC why the return was late.

There have been few penalty appeal cases for ERS but in Talkative Limited v HMRC [2019] TC07172 the FTT dismissed an appeal against late filing penalties for an employment related securities return; ignorance of the law and reliance on an adviser were not reasonable excuses.

Useful Links

Employment Related Securities: designing share schemes and how they are taxed

How to appeal a tax penalty