Companies that award shares, options or other securities to UK employees, directors or officer holders need to be aware of the July 6 deadline to submit an annual return to HMRC. The requirement covers any form of equity incentive, such as restricted or unrestricted shares, growth shares, share options and other forms of share awards and securities.

Companies do not need to register or report on share awards made to non-employees in the UK such as consultants or contractors, or to employees outside the UK.  Awards made to Employer of Record employees need to be reported, usually by the Employer of Record employer.

Steps To Take

Companies should register their ERS schemes with HMRC online (via the PAYE portal).

• Even one-off share awards, such as the grant of restricted shares to a director, are considered a “scheme” and need to be registered with HMRC online.
• If you have not yet registered an ERS scheme with HMRC, you should do so now to allow time to submit an annual report by July 6.
• You will also need to self-certify that tax-favoured share plans (including EMI and CSOP schemes) meet certain requirements.

For each registered ERS scheme, companies must submit annual reports covering cover all equity incentive activity in the tax year 2022/2023, such as the grant, exercise, lapse, cancellation or variation of awards or the acquisition of shares. If no activity has occurred, companies must file a “nil” return.

Automatic penalties apply for late filings. A company can also face penalties for material inaccuracies