Employers may offer their employees the opportunity to own shares in the company. This could involve giving shares to the employee, allowing them to buy shares at a discount or awarding them options to buy shares at a fixed price in the future. The share scheme may be formal or informal (eg, a one-off gift or shares) and it may or may not benefit from tax advantages. Tax-advantaged schemes include enterprise management incentives (EMI).  

New ERS schemes must be registered with HMRC and from then on, the employer must submit an annual return for the scheme to HMRC.

Action required  

To ensure that they meet their obligations for the tax year 2025/26, employers should do the following by 6 July 2026: 

• Register any schemes that were new in 2025/26 with HMRC. The registration deadline is 6 July after the end of the tax year in which:
  • for tax-advantaged schemes, the first award or shares of grant of options was made; or
  • for non tax-advantaged schemes, the first reportable event happened.
• Submit an ERS return for 2025/26 for each scheme. HMRC will issue an automatic £100 penalty where the deadline is missed, and additional penalties of £300 where the return is three months and six months late. A nil return should be submitted where there are no transactions or events to report. Agents can submit an ERS return on behalf of an employer where the employer has authorised them to do so.
• Submit EMI notifications for any options granted in 2025/26. The employer will still need to submit an annual return for the EMI scheme. At the Budget 2025, the government announced that it will legislate to remove the EMI notification requirement from 6 April 2027. 

The employer should tell HMRC where a ERS scheme has ceased. The employer will still need to submit an annual return for the tax year in which the final event date falls.  

Practical points 

HMRC recommends that employers take the following action when completing and submitting annual returns: 

• use the correct and most up to date return template, otherwise HMRC’s online service may reject the submission; and
• save a copy of the return before they submit it to HMRC, as they will not be able to access a copy through HMRC’s online service. 

Recent changes  

HMRC has simplified the reporting requirements for net settled share awards by reducing the requirement to a single row on the ERS return and removing double-line reporting.  Previously, employers were required to report the shares beneficially acquired by the employee and the relevant cash payment on two separate lines. Late returns for earlier tax years should also follow the new single line reporting requirements.  

As reported in an earlier article, the obligation to report non-tax advantaged ERS data for short-term business visitors has been removed where no UK income tax or national insurance contributions would be due.