Employment Related Securities (ERS) annual returns for 2017/18 should be filed online in the U.K. on or before 6 July 2018.¹

Employers have an annual obligation to report any notifiable events that occur in relation to ERS (i.e., shares or other securities that are acquired by reason of employment), or rights to acquire ERS (such as employee share options).  

Any notifiable events must be reported to HM Revenue & Customs (HMRC) by submitting the relevant return(s) through ERS Online Services on or before 6 July 2018. 

Automatic penalties will arise if an employer does not submit the relevant ERS return(s) (including any required ‘nil’ returns) by 6 July 2018.

In summary, employers have an annual obligation to report any of the following events that occur in relation to ERS during a UK tax year:

• Grants of rights to acquire shares or other securities (e.g., options or long-term incentive plan awards); 
• Acquisitions of shares or other securities; and/or
• The lifting of restrictions (such as a risk of forfeiture) from shares or other securities.

These obligations extend to certain other reportable events involving shares or other securities which are acquired, or treated as having been acquired, by reason of employment.

Events that occur outside a formal employee share plan, such as an acquisition of shares or grant of options during a change of control or other transaction, can also give rise to reporting obligations.

Separate reporting obligations arise in relation to non-tax-advantaged plans (or other arrangements), and each type of U.K. tax-advantaged employee share plan. 

For non-tax-advantaged arrangements, no reporting obligations should arise in relation to ERS awards held by individuals who were not-U.K. resident and had no U.K. duties both (i) on the date of grant; and (ii) throughout the vesting period of the relevant award.

Confirm Registration Status

In order to file the relevant returns, employers who have a reporting obligation for 2017/18 must register each plan or other arrangement with HMRC’s ERS Online Services (part of HMRC Online Services), if this has not already been done.

Non-tax-advantaged plans or other arrangements can be included under a single registration.  U.K. tax-advantaged plans (which are known as CSOP, SAYE, SIP, and EMI plans) must each be registered separately.

For U.K. tax-advantaged CSOP, SAYE, and SIP plans established during 2017/18, employers must submit on or before 6 July 2018, an online declaration that the conditions for tax-advantaged status are met.  If this is not done, the relevant tax advantages may be lost.

Employers should review their ERS return registration status to confirm which registrations (if any) were made in previous years and whether any additional registrations are required. 

New registrations should be made in good time to allow all relevant submissions to be made on or before 6 July 2018.

Review the InformationRequired

ERS return templates and associated HMRC guidance are available by clicking here.

Employers should download and review any required returns’ templates as soon as possible to confirm whether they hold the information required to complete and submit those returns by the deadline.

Late Filing Penalties

Where a plan or other arrangement has been registered with ERS Online Services (either for this year or for the previous tax year), and the employer does not submit an ERS return by 6 July 2018, an automatic penalty of £100 per registration will arise. 

Additional penalties will arise where submissions remain outstanding by 6 October 2018 (an additional £300) and 6 January 2019 (a further £300).  HMRC has discretion to impose further penalties in relation to any returns that remain outstanding after 6 April 2019.

If no reportable events occur during a tax year in relation to a registered plan, a ‘nil’ return must be submitted by the filing deadline to avoid a penalty.

Registrations that are no longer required should be closed in order to avoid penalties for inadvertent non-filing arising.

Employers should consult with their qualified tax professionals to confirm their reporting obligations and understand the registration process.  They may also wish to seek assistance with completing and submitting the annual ERS returns.

1  For additional information, see HMRC, “Tell HMRC about your employment related securities,” (published 1 January 2014).

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The information contained in this newsletter was submitted by the KPMG International member firm in the United Kingdom.