ERS annual returns – actions to take for the 2023/2024 tax year

If your business offers UK employee share plans, growth shares or share awards, you need to do the following by 6 July 2024 for the 2023/2024 tax year:

• complete end of year reporting for share plans and arrangements
• register all new share plans and arrangements on the HMRC online system
• self-certify new tax-favoured share plans.

If you don't take the above actions in time, you will be subject to automatic penalties and will lose the tax-favoured treatment for certain share options.

The following automatic penalties will apply:

• immediate £100 penalty for filing after the deadline of 6 July 2024
• additional £300 penalty if filing is three months late
• additional £300 penalty if filing is six months late.

There is also a £10 per day penalty if the filing is more than nine months late and HMRC decides to impose such daily penalty.

There is also a penalty of up to £5,000 for a material inaccuracy in a return which is not immediately addressed.

What do you need to do?

If any reportable events have taken place concerning either tax-favoured plans or non tax-favoured plans and arrangements during the 2023/2024 tax year, you will need to report them. "Arrangements" include the acquisition of employment-related securities by employees and directors generally, not just under a formal plan. This would include growth shares and the acquisition of restricted and unrestricted shares.

Reportable events include the following:

• grant of options
• exercise of options
• certain lapses of options
• the acquisition of shares
• events under the restricted shares legislation and anti-avoidance rules.

You will need to register all new employee share plans and arrangements online. You will also need to self-certify that any new tax-favoured share plans (EMI, CSOP, SIP and SAYE) meet certain requirements.

If you have not used the HMRC website for employment-related securities already, you will not be able to complete your end of year reporting until you have registered your plan or arrangement with HMRC. This can take over two weeks, so you don't want to leave it until the last minute!

Nothing to report?

If you have previously registered a plan or arrangement but have no reportable events for the 2023/2024 tax year, you must submit a "nil return" to avoid automatic penalties arising for a non-filing.

Here to help

Please get in touch with a member of our Employee Incentives team if you need assistance or any further information.