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Employment related securities year-end reporting: summary

Now that the 2023/24 tax year has come to an end, there are a variety of tax filing obligations on employers.

One of these obligations is that if employees (including directors) have any transactions involving shares or similar securities in their employer, (or company in their employer’s group), then the employer may have to make additional year-end reports to HMRC.

What are employment related securities (ERS)?

ERS are simply HMRC’s way of referring to shares and similar financial ‘securities’ held by employees and directors. Amongst other things, this can include shares, options and loan notes.

Employers quite often use shares and share options as a way of rewarding and incentivising employees by giving them a stake in the business. There are various ways of doing this and it can be tax efficient for both your company and your employees, including many statutory, government backed plans encouraging their appropriate use.

Why do I need to tell HMRC about these arrangements?

In the past, shares and other ERS have been used by some taxpayers as a mechanism for reducing their tax bill. Anti-avoidance legislation relating to shares has arisen as a result and HMRC now monitor their use more carefully. Filing of ERS moved online some years ago and automatic penalties can be imposed for late filing and non-completion. If you have reportable events, or you have previously registered, then you will need to file online. Online filing is intended to provide better information for targeted reviews, making timely and accurate completion more important now than ever before.

The ERS returns do not themselves collect any tax, they are merely a monitoring system. This does however mean it can be necessary to report even ‘innocent’ transactions where no tax arises.

How can PKF Francis Clark help?

As with all tax returns, ultimately it is the tax payer’s responsibility to determine whether they have reportable transactions and therefore if a return is needed. The purpose of this blog series and accompanying brochure is to help you identify if you have a reporting obligation.

If you would like assistance, PKF Francis Clark can help you with the process of filing these returns. Unfortunately, determining whether or not a return is needed can be dependent upon information that may simply not be available to us, therefore it is important that you read through the brochure and carefully consider for yourself whether it might apply.

HMRC provides online help with completing the forms, however whilst this is a straight forward process for many, some situations can inevitably be complex.

It is even possible to appoint us as your agent for these returns. However, this is a separate registration to your other tax affairs and requires a specific registration process. If we are not already registered as your agents for online employee share plan returns, it usually takes around six weeks for HMRC to set up the registration. If a request to register as your agent is received after 24 May, we are therefore unable to guarantee we would be in a position to submit the return on your behalf before the filing deadline.

We have also produced some more blogs in this series:

FEATURING: Doug Oakman
Doug Oakman is a tax manager based in our Bristol office, specialising in management share incentives and employment related securities. He joined PKF Francis Clark… read more
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