Offer shares, options or other securities to your employees or directors?

What is caught?

If your employees or directors have acquired shares or other securities, these are likely to be reportable to HMRC. Reporting obligations can also apply to later events like share disposals or changes in rights.

Employee transactions in any of the following can be reportable:

• shares in your company or group
• share options
• loan stock and debentures
• restricted stock units
• interests in partnerships (LPs/LLPs).

Reporting obligations can apply even if there is no formal share plan.

What you need to do

To make reports, a plan must first be registered with HMRC. Registration of a ‘plan’ is needed even for a one-off award. Self-certification of compliance with the relevant statutory code will be required at this stage for certain tax-advantaged plans.

The deadline for plan registration and filing of a report against the plan for employment-related securities (ERS) events in the period 6 April 2024 – 5 April 2025 is 6 July 2025. 

Failure to register a tax-advantaged plan established in the 24/25 tax year by 6 July 2025 may result in loss of tax-advantaged status.

Reportable events include (but are not limited to):

• option grants
• option exercise
• cancellation or lapse of an option in exchange for consideration
• changes to restrictions on securities
• sales of shares at more than market value.

If you have an active plan from the prior year against which to file your report, you do not need to register a new plan but must make a return against that plan by the 6 July 2025 deadline. If there have been no events in the year, but the plan is registered with HMRC, you must make a ‘nil return’.

• Enterprise Management Incentive (EMI) plans – there are separate notification requirements in relation to the grant of EMI options, please contact us
• Company Share Option Plans (CSOP)
• Save As You Earn (SAYE) plans
• Share Incentive Plans (SIP)
• Non-tax advantaged plans (also known as ‘unapproved’ or ‘other’ plans and previously all schemes which were filed on a Form 42)
• Overseas ERS plans which have UK participants.

Only the company can register the plan(s) via the HMRC online services; ERS agents can only view registered plans and file returns for registered plans.

Self-certification

Self-certification that the plan meets the requirements of the relevant legislation is required in relation to CSOP, SAYE and SIP. This declaration is made when the plan is registered. Further declarations (made through the annual return) may be required to confirm that the plan remains compliant following any alterations to key features.

It is the company secretary’s responsibility to ensure that relevant ERS schemes have been self-certified.

For EMI schemes, a declaration that the options granted meet the requirements of the relevant legislation must be made at the point those grants are registered.  

This declaration may be made by a director or the company secretary.

How to register and self-certify an ERS scheme

To register your schemes and arrangements, you need to have access to HMRC Online Services and PAYE for employers. Please note that payroll agent PAYE access to HMRC Online Services is different from PAYE for employers’ online access, and registration of ERS plans cannot be done via the agent login.

If you have not yet registered with HMRC as an employer, follow the required process on the GOV.UK website. Prior to registering for online access, please ensure HMRC have the correct correspondence address for the company on their PAYE records as they will post your login details to that address.

Once you have access

1. Login to HMRC Online Services.
2. Continue past the security message.
3. Select ‘Services you can use’ in the left-hand menu.
4. Select ‘PAYE for Employers’.
5. At the bottom of the page on the right-hand side, go to the section ‘employment-related securities’. Select ‘Register a scheme or arrangement’ and follow the on-screen instructions.

While we are not able to register schemes directly, should we be instructed to act as your ERS agent, we would be more than happy to assist you with this process if required via meetings and conference calls.

Annual ERS filing requirement

In addition to registering the ERS plan(s) with HMRC, there is also a compliance obligation to file an annual ERS return by 6 July 2025 for 2024/25 and then annually thereafter until the plan is closed.

How HMRC use the information filed

It is vital to make sure all information reported on the ERS return is accurate, as HMRC may cross-reference the data with other connected information they are provided with such as the corporate tax return, payroll submissions, and individual self-assessments to ensure there are no conflicts.

Globally mobile employees

The reporting and taxation of equity is particularly complex when it comes to globally mobile employees. These may be UK employees in UK plans who spend time working outside the UK or participants in non-UK equity reward plans who work in the UK either for a UK employer or on an overseas secondment basis.

The UK payroll withholding for such individuals can be very difficult from a PAYE and National Insurance perspective.

ERS plans which include non-UK participants or UK participants in overseas plans may also need to be reported to HMRC by 6 July 2025 if an employee worked at any time in the UK during the earning period.

Penalties

If a return is filed after 6 July 2025, HMRC will issue a late filing penalty of £100 on 7 July 2025.

Additional late filing penalties will be charged if the return remains outstanding as follows:

• three months after the filing deadline £300
• six months after the filing deadline an additional £300
• nine months after the filing deadline, further daily penalties of £10 may be charged until the return is filed.

As well as the late filing penalties, HMRC may also issue a penalty not exceeding £5,000 if a return is found to contain a material inaccuracy that was careless or deliberate, or if the return is not corrected once the company becomes aware that the return is incorrect.

Please note the registering of any plan creates an annual filing obligation. If a plan is registered but no reporting events occur during the tax year, a nil return still must be filed. The obligation to file only ceases once the scheme has been closed down. Likewise, if a plan is incorrectly registered, a nil return is required to be filed after which the scheme should be closed down. Failure to do so may result in late filing penalties being issued.

Deadlines

The deadline to register share plans and to submit completed ERS forms to HMRC is 6 July 2025 for the 2024/25 tax year.

Timings to consider

While the 6 July 2025 deadline may seem far away, we recommend starting the process as soon as possible. Unforeseen delays may occur in determining which events are reportable, obtaining the required information, gaining access to HMRC online services and registering schemes with HMRC; these could lead to late penalties being issued.
The table below offers some approximate timescales; these may be useful to keep in mind.

Summary

What needs to be done:

• Register any new UK ERS schemes introduced since 6 April 2024 online with HMRC.
• Register any non-UK ERS schemes introduced since 6 April 2024 that have UK participants online with HMRC.
• File annual ERS reporting online with HMRC.

When:

• Registrations and Annual ERS reporting (even if a nil return) must be made online with HMRC by 6 July 2025 to avoid penalties arising.

How Crowe can help:

• Drafting of UK Equity plans as part of your Reward strategy together with related employee communication.
• Reviewing of Non-UK Plans to determine UK equivalence for payroll withholding and annual reporting purposes for UK taxable participants.
• Advise on PAYE and NIC withholding for trigger events under ERS plans, such as award and vesting or grant and exercise, for UK employees and global workforce participants.
• Annual ERS reporting with HMRC by 6 July.
• Bespoke advice to participants whose personal tax affairs are complicated by tax residency issues in the UK and elsewhere.
• Assist with bringing any annual reporting gaps up to date to stop penalties accruing.

For further information on anything covered in this article, please contact John Manis, or your usual Crowe contact.