Deadline for reporting Employment Related Securities (ERS) schemes or arrangements for the Tax Year 2016-2017
Employers are required to disclose transactions such as Employment Related Securities schemes (ERS) or arrangements in shares or securities that involve their employees and/or directors. All relevant transactions that have occurred during the tax year ending 5 April 2017 must be reported to Her Majesty’s Revenue and Customs (HMRC) by 6 July 2017. Late filing and inaccurate reporting can lead to penalties.
HMRC Online filing
If Employers have not made an online submission previously, they must register with HMRC online. Employers who have made an online submission before, will be required to complete a submission for 2016/17, even if no relevant transactions took place during that tax year.
What sort of transactions must a firm report?
- When an employee or director acquires company shares in the company, or any company connected to it, e.g. the ultimate parent company, whether UK or offshore;
- When an employee or director acquires shares in a fund (or interest in an LP fund) on terms that are subject to restrictions, and/or forfeiture, and/or are not available to any third party (e.g. beneficial fees or low minimum investment threshold);
- When an employee or director is granted or exercises options, or has converted any vesting rights;
- The disposal of shares for more than their market value; and
- Any action that increases the value of shares (e.g. removal of restrictions or forfeiture rights which includes at time of outright sale).
Newly incorporated companies
New companies that have issued shares between 6 April 2016 and 5 April 2017 (inclusive) are potentially liable to complete an online submission for 2016/2017. However, this is not necessary if the only shares issued in the tax year were subscriber shares which have been issued at the nominal value to the founder directors or their families (or acquired directly from the formation agents). Also, shares that are issued at par to directors who originally acquired *founder shares and which have been issued before trading commences may also be excluded.
Where shares are acquired by an employee or director independently (e.g. through a broker) on the same terms as any third party; or where shares issued to employees only as a result of approved share schemes (in which case separate reporting may be required depending on the particular scheme), an employer may not be required to complete an online submission.
Don’t overlook your 2016/2017 ERS filing obligations
If you would like us to assist you with the registration and submission of the online report please contact Sutharman Kanagarajah.
*Please note that founder shares exemption does not apply to offshore companies, where all share acquisitions, including subscriber shares, must be reported.