Employment Related Security Reporting

As we are nearing the end of another tax year, employers need to start turning their attention to the various ‘end of year’ returns that need to be submitted to HMRC.

This includes reporting any Employment Related Securities (“ERS”) to HMRC, which includes all share related transactions.

The definition of what constitutes an ERS is widely drawn, and includes any security where the right or opportunity to acquire the security (or an interest in a security) is:

• made available by reason of the employment of the individual acquiring the securities (or interest in the security) or any other individual, or
• made available by an individual’s employer.

Where a person connected with an individual’s employer makes an interest available, it will be regarded for ERS as being made available by reason of an employment relationship and fall within ERS legislation.

ERS is an area that continues to challenge employers. ERS returns must be submitted online through HMRC’s portal; While navigating the online system can be administratively burdensome, it is also worth noting that the regime covers a much broader range of activity and is not limited to just shares or share option awards made under formal employee share schemes.

The deadline for submission of the 2018/19 filing is 6 July 2019. HMRC apply automatic late filing penalties of up to £700 (plus a potential £10 a day penalty if returns are more than nine months late), while HMRC can also impose penalties of up to £5,000 for submissions of an incorrectly completed return.

For any clients who have previously not filed ERS returns online, the registration process with HMRC can take up to 28 days therefore, it is important to complete this process early to avoid a late submission penalty.

We are here to help Employers meet their obligations. If you require support in this area, please contact frazer.nicol@aab.uk or your usual AAB contact.

To find out more about AAB’s E2 Team, please click here.