Annual Reporting for Employment Share Schemes

If your company operates share schemes or makes other awards of employment-related securities to employees or directors, you must report these arrangements to HMRC each year. This applies even if no shares were actually awarded during the tax year — in which case you'll need to submit a 'nil return'. Missing the deadline can result in automatic penalties, so it's important to understand your reporting obligations.

What needs to be reported

You must submit an annual return for all employment-related securities schemes you've registered with HMRC. This includes non-tax-advantaged share schemes (arrangements that don't qualify for special tax relief) as well as other employment-related securities arrangements.

The reporting requirement applies whether or not any activity took place during the tax year. If nothing happened with your scheme — no shares were awarded, no options were exercised, no restrictions lifted — you still need to tell HMRC by submitting a nil return.

The annual deadline

You must submit your employment-related securities (ERS) return by 6 July following the end of the tax year. For the 2024/25 tax year, this means the deadline is 6 July 2025.

HMRC will not send you a reminder. It's your responsibility to remember the deadline and submit on time, even if you use an accountant or agent to handle the submission for you.

How to submit your return

You need to complete and submit your return online through HMRC's ERS online service.

For non-tax-advantaged share schemes, you can either:

• Use HMRC's end-of-year return template
• Create your own template using HMRC's technical note

HMRC provides guidance notes to help you complete specific sections of the template.

Before submitting, you can use HMRC's spreadsheet checking service to check your files for formatting errors. This can help avoid delays in processing your submission.

Once your template is ready, submit it through the online ERS service. You'll need to sign in using the same Government Gateway user ID and password you used when you originally registered the scheme.

Penalties for late filing

Late filing penalties apply automatically if you miss the 6 July deadline.

Initial penalty: HMRC will charge an automatic £100 penalty if your return or nil return is not submitted by 6 July.

Further penalties: If you still don't submit after the initial penalty:

• 3 months late (by 6 October): An additional automatic penalty of £300
• 6 months late (by 6 January): Another automatic penalty of £300 (in addition to the 3-month penalty)
• 9 months late (by 6 April): HMRC may apply further penalties of £10 per day

These penalties escalate even for nil returns, so you cannot avoid them simply because there was no activity to report.

If you receive a penalty

If you're charged a late filing penalty, you should:

1. Submit your annual return or nil return immediately to prevent further penalties building up

2. Do this even if you plan to appeal the penalty

If your scheme has ended but you haven't told HMRC, you must:

• Enter the final event date online through the ERS service
• Submit either a return or a nil return for the ceased scheme

Taking these steps quickly can help you avoid additional penalties.

Appealing a penalty

You can appeal a late filing penalty if you have a reasonable excuse for missing the deadline. However, HMRC will only accept your appeal if you've already submitted the outstanding return.

Your penalty may be cancelled or reduced if you can show:

• You had a reasonable excuse for not submitting on time
• You submitted the return without unreasonable delay once the excuse no longer applied

To appeal, send your request with full documentary evidence of your reasonable excuse by email to shareschemes@hmrc.gov.uk or by post to:

Charities, Savings and International 1

HMRC

BX9 1AU

HMRC will review your appeal and inform you of their decision, including what further steps you can take if you disagree.

If your scheme has ended

If you registered a scheme in error or it's no longer operating, you should formally end it through the ERS online service. However, you must still submit an annual return for the tax year in which the final event date falls.

To end a scheme:

1. Sign in to HMRC Online Services for employers using your Government Gateway details

2. Choose the 'Employment related Securities' card

3. Select 'Register or view your schemes and arrangements'

4. Select 'View schemes and arrangements'

5. Choose the scheme you need to end

6. Select 'End of year returns'

7. Select 'Provide a date of final event'

8. Enter the date the scheme stopped

If the end date is in the past, remember you must still submit an annual return for the tax year containing that final event date.

All ERS schemes must be linked to a live employer PAYE scheme. If you're closing your PAYE scheme, you may also need to end your ERS scheme.

Sources

• Non-tax advantaged share schemes: end of year return template, technical note and guidance notes
• Check how to deal with an employment related securities penalty
• Tell HMRC your employment related securities scheme has ended

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.