ERS annual returns – actions to take for the 2024/2025 tax year
If your business offers UK employee share plans, growth shares or share awards, you need to do the following by 6 July 2025 for the 2024/2025 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 (including CSOP options).
The following automatic penalties will apply:
- immediate £100 penalty for filing after the deadline of 6 July 2025
- additional £300 penalty if filing is three months late
- additional £300 penalty if filing is six months late.
There can also be a:
- £10 per day penalty if the filing is more than nine months late and HMRC decides to impose such daily penalty
- 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 2024/2025 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
- 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 2024/2025 tax year, you must submit a "nil return" to avoid automatic penalties arising for a non-filing.
Notification of EMI option grants – new 6 July HMRC deadline
For EMI options granted on or after 6 April 2024, the deadline for a company to notify HMRC of the option grant has been extended (from the previous 92 days following grant) to 6 July following the end of the relevant tax year.
This means that any EMI options granted in the 2024/2025 tax year must be notified to HMRC on the online system by 6 July 2025.
We would still recommend that any EMI option grants are notified to HMRC throughout the year, given that the deadline coincides with the deadline for the annual reporting obligations outlined above.
Click here for our latest update on the change
Don't forget!
- Take screenshots of every stage of your end of year reporting, and for all other activity on the HMRC online site (including the notification of EMI option grants), for your records.
- Check that the company is still fully compliant with current EMI rules when granting new EMI options.
- If you have granted options over shares in a non-UK company to employees of a UK subsidiary, it will be simpler for the UK subsidiary to be responsible for the online registration, self-certification and reporting obligations.
- Check your option plan rules and option agreements carefully when employees are ceasing employment, to ensure that the correct treatment is followed and that the tax implications are appreciated.
- If you are planning on using any discretions in your option plan or agreements to allow EMI option exercises or amend the vesting of such options, we recommend contacting us for advice as this is an area on which HMRC has updated its guidance.
What's new from us?
- We recently launched our Guide to Global Share Option Plans, which contains detailed information to help you navigate the key legal, regulatory, tax and governance considerations when establishing share option plans and granting options globally.
- Have you heard about PISCES, the new secondary share trading platform proposed to be launched this year? You can find our summary of the proposed platform here and we recently published an insight into the employment tax implications, which can be found here.
- We launched our Tax Talks Quick Listens podcast, where members of the Tax & Incentives team talk about areas such as all employee schemes, common EMI mistakes and recent changes to CSOP schemes. You can listen to the first six episodes here.
- At the Autumn Budget 2024, the government published its long-awaited response to the consultation on Employee Ownership Trusts. You can find our summary of the main changes here.
Here to help
Please get in touch with a member of our Employee Incentives team if you need assistance or any further information.
