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.
We hope that you are staying safe and healthy during this uncertain time. We appreciate that Share Plan Reporting may not be a top priority at the moment. We will be working as normal to prepare annual returns as the share plan reporting begins. To date, there have been no official government announcements to postpone the ERS filing deadline or waive penalties for late filing. We are aware that at least one body representing companies who use share plans has asked if HMRC will consider an extension, and so are happy to discuss your organisations' specific needs in more detail with you at any time.
Managing your employee share plans and designing new arrangements through the COVID-19 crisis will require the consideration of many new additional areas. There will be many design issues and unintended tax consequences to deal with. We shall update this page when these areas become more certain through HMRC announcements and the development of post-crisis remuneration best practice. Read our full summary of what you need to know now.
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. This year there will be additional attention applied to any company using net settlement following the updated HMRC guidance on how to report this. As net settlement is typically a US plan feature, we would suggest all UK subsidiaries of US listed companies pay careful attention to the reporting requirements this year.
If you are unsure about your obligations, use our free Share Plan Reporting tool to check your position.
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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 BDO 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:
- 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.
Talk to us about your reporting needs
The expertise you need
Since the introduction of online reporting, our share plan reporting team have submitted over thousands of returns. Our knowledge and experience of the reporting process and system means we can quickly resolve any problems and bring your reporting up to date to minimise the risk of incurring penalties.
In most cases, we act as authorised agents and are always happy to help with additional company obligations that many agents will not, such as plan registration and ceasing plans.
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.
BDO Equity Reporter
The BDO Equity Reporter streamlines ERS filing and is ideal for large companies that operate share incentives for hundreds of employees or with multiple transactions per employee and therefore thousands of lines of data.
As well as saving time, BDO Equity Reporter uses secure portal technology that helps project manage the returns process as well as providing the detailed analysis of your share plans that you may need for payroll tax diagnostics, calculating corporation tax deductions and the apprenticeship levy.
Find out more about Equity Reporter
Share plans and Incentives service
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.