ERS annual reporting deadline fast approaching

Any company that operated an employee share plan, option arrangement or other management incentive arrangement during the 2025/26 tax year should check now whether it has an employment related securities (ERS) filing obligation. This is not limited to formal share plans. 

The rules can also apply to one-off or bespoke arrangements involving employees or directors, including non-executive directors. For example, a filing may be needed where an employee or director acquired shares, was granted or exercised options, received loan notes or other securities, or participated in carried interest or similar incentive arrangements.

The filing process can take longer than expected, particularly where a plan has not yet been registered with HMRC or where information needs to be gathered from participants. Our incentives team can assist with the registration process, the preparation of returns and any questions about whether a particular transaction needs to be reported.

Who needs to and how to file?

• Any company that operates an ERS arrangement must submit an online return to HMRC by July 6, 2026. The deadline is strict and an automatic GBP100 penalty applies if the return is late (with further penalties for ongoing failure).
• Before a return can be filed, the relevant share plan or arrangement must be registered with HMRC through the ERS online service, which is accessed via the company’s PAYE online account. Registration is not immediate and can take several days, so it should not be left until the last minute.
• A separate return is required for each registered plan or arrangement. This is the case even where there has been no activity during the 2025/26 tax year. If a plan remains registered but no reportable events have occurred, the company must still file a nil return to avoid penalties.
• For non-tax-advantaged arrangements, activity can generally be reported under a single “other” return. Tax-advantaged plans, such as EMI, CSOP, SAYE and SIP, need to be registered and reported separately. Where a new tax-advantaged plan has been established, the company will also need to self-certify that the relevant statutory requirements are met.

What needs to be reported?

The ERS reporting regime is deliberately broad. It covers relevant events involving employment-related securities, such as shares, options, loan notes and other securities acquired or held by reason of employment or office. Common reportable events include the grant or exercise of options, the acquisition of shares, certain lapses of options, events involving restricted securities, disposals by employees or directors, and the cancellation, release, exchange or replacement of awards. 

The rules can also apply to transactions that are not part of a standing employee share plan, including management incentive arrangements implemented on a one-off basis. If there is any uncertainty about whether an event is reportable, it is worth checking before filing. HMRC can impose penalties where a return contains a material inaccuracy, and errors are often easier to correct before the return is submitted.

Practical points to avoid last-minute issues

HMRC's checking service

The HMRC templates are highly prescriptive. Returns can be rejected for formatting issues, even where the underlying information is correct. It is therefore sensible to run the completed files through HMRC’s ERS checking service before submission.

National insurance numbers

Companies should also confirm at an early stage that they hold all the required participant information. In many cases, HMRC’s electronic filing system expects a national insurance number for each individual included in the return. 

This can create difficulties where, for example, a participant is non-UK resident or does not have a UK national insurance number. There are ways to deal with this, but they can take time to put in place.

Take screenshots

It is equally important to keep proper records of the filing itself. HMRC’s online service does not retain copies of submitted returns in a way that can be accessed later. Companies should save the completed templates, take screenshots during the submission process and keep a copy of the confirmation page. 

Additional points to consider for EMI options

• Companies that granted EMI options during the 2025/26 tax year must submit both an EMI annual return and individual EMI grant notifications to HMRC by July 6, 2026. Failure to notify on time may result in the intended EMI tax treatment being unavailable.
• The government has announced that the individual EMI grant notification requirement will be is removed from April 6, 2027, but that change has not yet taken effect. Companies that granted EMI options during the 2025/26 tax year should therefore still submit the individual EMI grant notifications (as well as submitting the EMI annual return). 

Key HMRC links

The main HMRC guidance and filing pages are available here:

• Register your ERS arrangement with HMRC
• Submit your ERS return
• Use HMRC’s ERS file checking service
• Submit an EMI notification

How our incentives team can help

The ERS rules are easy to overlook, particularly where an arrangement sits outside a formal employee share plan. Early preparation can help avoid late registrations, rejected templates and missed EMI notifications. Please reach out to any member of our Incentives team if you would like help identifying reportable events, registering plans, preparing annual ERS returns or submitting individual EMI grant notifications.