HMRC have issued their latest Employment-Related Securities Bulletin which includes some useful tips. Here is our enhanced version with links to our guides.

Contacting HMRC for advice about share schemes

  • When contacting HMRC include the relevant share scheme reference number or they will not respond.

Employment-Related Securities (ERS) online service

  • If you have difficulties when trying to submit annual ERS returns, HMRC advises trying to submit the return again. If problems continue, report this using the ‘Is this page not working properly’ link.
  • Take a screen shot/ keep a printed copy of any on-screen error message to help HMRC consider late filing penalty appeals.

See Employment-Related Securities: Reporting issues and Penalties: Employment-Related Securities and share scheme returns

Annual Returns

  • HMRC report that nearly a third of registered share schemes did not file 2020-21 annual ERS returns by 6 July 2021, resulting in late filing penalties being issued.

This is a reminder that even if there have been no reportable events in the year, a nil return must still be submitted each year until the scheme ceases and a final event date is entered.

See Shares, securities & options: Tax compliance

Ceasing a scheme no longer operating or registered in error

To cease a scheme the company must access the ERS online service through their PAYE for Employers account:

  • Scroll down to the bottom of your screen and select ‘View schemes and arrangements’.
  • Select the relevant scheme and:
    • Enter a date of final event in the next screen.
    • For Enterprise Management Incentive (EMI) schemes select ‘End of year returns’ then ‘provide a date of final event’ and enter the date. This can be a date in the past. See EMI checklist
  • You must have filed annual returns for every year even if the return was nil.

The company must do this, agents cannot deal with it through their agent ERS online account.

See Employment-Related Securities: Reporting issues

Sell to Cover and vesting of restricted securities

The bulletin includes details of how to report share acquisitions in ‘sell to cover’ cases where the employee exercises their options and then disposes of some of the shares to cover any PAYE or National Insurance Contributions (NICs) due, including where restricted securities options are vested.

Net settlement and annual reporting requirements

Under net settlement, a company uses its own cash to settle the PAYE and NICs due to HMRC.

  • The company then issues fewer new shares to those employees so that the value of the shares received equals the post-tax (net) value that they would have enjoyed if they’d opted to sell to cover instead.

HMRC published guidance on how to report the net settlement of share awards by employers in ERS Bulletin 33, including an example of a nil cost option award.

  • The current bulletin takes this example and sets out step-by-step how to report such an award and what to do if you have not done this correctly, including when amendments to ERS returns are required.

See Employment Related Securities: What’s New? October 2019

Non-Statutory Clearance (NSC) Process

  • HMRC share schemes teams provide advice and support for general or straightforward enquiries sent to the Shareschemes mailbox This email address is being protected from spambots. You need JavaScript enabled to view it..
  • Contact by email is recommended: due to the COVID-19 situation, there may be delays in post reaching this team.

For complex cases or where there may be ambiguity about the application of the legislation:

  • Follow the Non-Statutory Clearance Service guidance and provide information as set out in the relevant Appendix.
    • If you need to disclose sensitive information and have concerns about sending this by email, send a short email without any sensitive data and with contact details and HMRC will contact you to arrange an alternative form of communication.

If you prefer to send enquires by post, the address is:

Charities, Savings and International 1
HMRC
BX9 1AU

External link

Employment Related Securities Bulletin 39 (August 2021) 

Links to previous Employment Related Securities: What’s New?

Employment-Related Securities: What’s New? March 2021


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