Share Plan Reporting
If you operate a share plan or there has been any type of equity transaction, involving UK employees or directors you will almost certainly have to submit a return to HMRC by 6 July to report all transactions in Employment Related Securities (ERS), also known as Share Plan Reporting. Private and listed companies should report annually. Where plans are operated by parent companies, the parent or a UK employing company should report.
Reportable transactions range from formal share plan activity to the acquisition of loan notes, gift of shares and disposals of shares for more than market value. The reporting obligation exists for private and listed companies and HMRC is increasingly looking at the correlation between payroll, corporation tax deductions and share plan reporting.
Download our guide to Share Plan Reporting which summarises the way employee or director share activity must be registered and reported in the UK.
Below, we look at this further and explore the following
- When is the Share Plan Reporting deadline?
- What are the penalties for a late return?
- How we can help you with Share Plan Reporting
- Looking at implementing a share plan?
When is the Share Plan Reporting deadline?
Transactions for each tax year should be included in the ERS return for that year which must be submitted by 6 July following the end of that tax year.
What are the penalties for a late return?
Penalties increase over time with £100 penalty for missing the 6 July deadline, £300 penalty issued on 6 October and a further £300 issued on 6 January. Daily penalties can then be applied from 6 April or 9 months after the deadline however we have never seen these applied in practice. The biggest risk for late returns is the additional attention from HMRC. We are seeing increasing levels of ERS compliance checks. Don’t take the risk of submitting your return late – now is the time to get prepared. Latest HMRC figures show that over one third of returns were submitted late.
How we can help you with Share Plan Reporting
Late returns trigger automatic penalties and late certification for tax advantaged share plans can be even more expensive. You can rely on us to help with all aspects of your reporting requirements so that you are fully compliant. Our Share Plan Reporting services include:
- Help you assess if a share plan return must be filed
- Identifying all share scheme reporting obligations
- Assistance with registering plans
- Becoming your ERS agents so that we can complete and submit the share plan returns
- Assisting with historic reporting to ensure your records are up to date, to put a stop to further penalties.
We recommend employers start the annual return process as early as possible. You will need time to identify all reportable events, such as where share options have been exercised or restricted stock units vested for internationally mobile employees. You should also allow time to identify and resolve any problems that arise.
Share Plan Reporting – are you meeting all your share plan reporting obligations?
In the video Victoria Bright explains what share plan reporting obligations exist in the UK, risks for late returns and ways BDO can help.
Ahead of the deadline on 6 July, we share some top tips to help you prepare:
- Start early! This is key if you need to set up access to the HMRC browser or need to register any new plans.
- Collate all your data in one place to avoid missing any reportable activity. Remember the changes this year mean NI numbers and PAYE references are required which may mean collating extra data.
- Don’t forget to consider international mobile employees. If an employee has left the UK, their reporting is often missed.
- There are many parts of the ‘Other’ form that require a number to be entered which you can only determine by reference to other documents, such as type of restrictions.
- Remember if your business is listed on the AIM market – the shares are not listed for the purposes of reporting.
- Remember that the formatting is very precise on the HMRC returns so be sure to check this.
- Remember to submit nil returns for all open plans where there was no activity in the year.
- Save confirmation submission receipts for all returns along with a copy of the final return submitted – HMRC will not provide you with copies of submitted returns.
- If your plans have closed, they will need to be officially closed through the Company HMRC gateway, this is often missed on transactions.
- Avoid penalties by submitting before the 6 July deadline and make sure your returns are correct.
Looking at implementing a share plan?
Do you want advice on how to create the right incentive plan to effectively recruit and retain the best talent? Our experienced team will help you create and implement the right share plan and other incentives to grow your business. Find out more about how we can help you implement the right Share plans and incentives.
Share Plan Reporting is just one of the deadlines that employers need to be aware of for 2023. Read our guidance on how to ensure you have accurate data ready in time to meet all the reporting deadlines: Employer's Year End 2023