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Annual reporting for employee share and share option plans

Did you know? All reporting for the tax year ending 5 April 2017 must be done through the HMRC Employment Related Securities (ERS) online service.

This is available for companies to register with now and it forms part of the PAYE online service. All annual returns must be filed by 6 July 2017.

Late filing penalties will automatically apply for noncompliance and approved share schemes may lose any eligible tax advantages if they have not been registered online by 6 July 2017. HMRC no longer issue notices to file or paper reminders for share schemes.

What needs to be reported?

Any share transactions involving employees will need to be reported online on an Employment Related Securities return, including:

Shares, options or securities that have been issued to or acquired by employees or directors.
Options that have been granted, exercised or cancelled.
Companies and LLPs that are members of international groups must take particular care to identify situations where their employees have received shares in other group companies, including overseas companies.

For approved schemes, there is also a self-certification process under which all EMI, CSOPs, SIPs and SAYEs must submit a declaration to HMRC that the criteria for qualification have been met. Self-certification only needs to be done once, therefore only new schemes which commenced operation in 2016/17 need to be completed by 6 July 2017. Failure to register the scheme within the ERS online service could mean the tax benefits of the approved scheme will be lost.

How we can help

HMRC have informed us it can take up to a week to register a scheme on the ERS online service, so we recommend registering sooner rather than later to ensure any technical issues can be resolved without any delay to your filings.

Buzzacott can complete your online registrations and assist with the filing of your Employment Related Security share scheme return, as well as the self-certification of any approved share schemes you have in place.

If you require further assistance please contact your usual Buzzacott representative and we will be happy to help, or contact: enquiries@buzzacott.co.uk.

You might also be interested in… Employee ownership

Employee ownership is a suitable option for business, not-for-profit organisations or social enterprises – we can talk you through the benefits for all sides. There are two main routes; direct ownership or long-term ownership through a trust - or you could choose a hybrid of both. The route that is best suited to you will depend on your organisation and its employees.

Direct employee ownership

If you would like to allow your employees to personally invest in the business and benefit from any capital growth, direct employee ownership may be right for you. There are additional benefits including tax breaks for individual share ownership.

Employee Ownership Trusts (EOT)

Employees can hold shares indirectly through an Employee Ownership Trust (EOT). EOTs are a government-backed scheme with some excellent advantages including income tax-free bonuses for employees and the owners’ proceeds from a sale to an EOT are tax-free.

The Trust must buy a minimum of 51% of the company from the existing shareholders and the employees will share the rewards of the performance of the business through the payment of tax efficient bonuses. The payments to outgoing shareholders can be funded by a third party or by cash from the business as it grows over time.

Is employee ownership right for you?

Employee ownership is first and foremost a cultural decision before a financial one; passing the ownership of the company to your employees in order to reward and motivate them. It can help to create goal congruency and propel the business forward. However, this requires a level of trust and transparency that does not suit every business.

Annual reporting for employee share and share option plans

What needs to be reported?

Direct employee ownership

Employee Ownership Trusts (EOT)

Is employee ownership right for you?

Read more…