ERS Reporting
Understanding Employment Related Securities (ERS)
Employment Related Securities (ERS) refer to shares or other securities acquired by employees as part of their employment. These can include stock options, shares, or other forms of equity-based compensation.
Submission Deadlines for ERS Reporting:
- Tax-Advantaged Schemes:
- Register & submit your annual return by 6 July following the tax year with reportable transactions.
- Late registration requires you to follow a specific process.
- Non Tax Advantaged Schemes:
- Register & submit your annual return by 6 July following the tax year in which the first reportable event occurred.
- Reportable events include acquiring or disposing of securities, assigning or releasing securities, and other relevant actions.
- Enterprise Management Incentive (EMI) Schemes:
- Notify HMRC about a grant of an EMI option within 92 days of the grant date.
- Submit your annual return by 6 July following the end of the tax year in which the option is exercised or lapses (or there is another reportable transaction).
- Missing these deadlines may result in the loss of tax benefits for both employer and employees.
Penalties:
Where there is a material innacuracy resulting from a careless or deliberate action that is not resolved as soon as becoming aware of the innacuracy, a penalty of up to £5,000 can be levied.
Late filing penalties are charged as follows:
- If not filed by 6 July - £100
- three months late - additional £300
- six months late - additional £300
- nine months late - additional £10/day
What needs to be reported?
The definition of an "employee", for these purposes, is drafted very widely and includes past, present and future, directors and employees of a company. "Security" is also widely drafted and includes the usual stock options, shares, but also restricted stock units, loan stock, debentures and units in a collective investment scheme.
In some cases, there is an exception to reporting if the transaction is considered to have taken place by reason of a family of domestic relationship, rather than because of their "employment".
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