Shares for employees and directors – have you complied with your reporting requirements?
Generally speaking, all shares acquired by employees or directors of the company will be employment-related securities (ERS). Annual returns are required to report these ERS to HMRC, even where there has been no movement in the year. This is subject to some exceptions, such as the initial subscriber shares on incorporation of a company.
Shares given in the normal course of personal or family arrangements are also exempt from reporting. However, it should be noted that HMRC interpret this rule restrictively, therefore if you have a long standing friend in the company who you have given shares, this will still be reportable. HMRC take the view that the main reason for the gift is because that person works for the company, i.e. you wouldn’t gift any of your friends the shares, only this particular one.
ERS returns cover the tax year and must be filed by 6 July following the end of the tax year, i.e. by 6 July 2022 for the 2021/22 tax year.
Returns should be filed for every year in which a scheme is open. If there is a one-off gift or purchase of shares therefore the scheme must be formally closed with HMRC to prevent further returns being required.
EMI schemes have further reporting requirements as new schemes must be registered with HMRC within 92 days.
For more information on this, please contact Gemma Hedges on 023 8046 1259.