Employment Related Securities (ERS) and Share Schemes are common practice for employers who want to reward, provide incentives or to retain staff.
If you do support or reward your employees using shares or other securities the ‘cash equivalent’ (less any amount they pay for the shares) is taxed as earnings. This means you are required to report these to HMRC via an annual ERS Return.
The ERS return must be filed online by 6 July following the end of the tax year. If it is not submitted in time penalties will be enforced. The ERS return must provide details of the securities/shares you have provided to employees during the tax year including, number of securities, market value of the securities, type of securities and the price paid for the securities.
The employees full name and National Insurance Number are required including the employing company, Companies House Number, Company’s Unique Tax Reference Number and the employers PAYE reference must be provided on the annual return.
There are certain exemptions to reporting share transactions such as:
- Company incorporations
- Share for share exchanges
- Company to company transactions
- Transactions in the normal course of domestic, family or personal relationships
- Flat management companies
- Rights and Bonus Issues
- Acquisitions by employees who are not UK resident
- No PAYE scheme
However due to the complex nature of ERS it is best that you speak to us to ensure it is being completed correctly.