For many UK employers, Employment Related Securities (ERS) reporting becomes a critical year-end compliance pressure point, particularly where equity incentives are managed across multiple payroll, tax and global mobility teams. Steph Smith, Head of Global Mobility at activpayroll, supports organisations navigating these requirements and notes that reporting issues most commonly arise where ownership of data and responsibility for filings is split across jurisdictions or functions. With HM Revenue & Customs (HMRC) applying strict deadlines and automatic penalties for non-compliance, maintaining a coordinated approach is essential, even where no transactions have occurred.
ERS arises in the context of employee and director share-based arrangements where securities are granted or acquired by reason of employment. This typically includes:
In practice, the key consideration for employers is not the structure of the award, but the resulting UK reporting obligations. These apply even where no immediate tax charge arises at the point of grant, exercise or disposal.
Employers are required to ensure all relevant ERS events are identified and reported to HMRC. These include:
This applies equally to both tax-advantaged and non-tax-advantaged arrangements, with reporting triggered by the employment connection rather than tax outcome.
All ERS schemes must be registered with HMRC before any reportable events occur. Once registered, employers are required to submit annual returns for each scheme.
Key requirements include:
Even where no reportable transactions occur during a tax year, HMRC filing obligations continue for any active registered scheme. Employers are still required to submit nil returns unless the scheme has been formally ceased.
Where organisations operate global equity plans, this requirement is often overlooked due to assumptions that inactivity removes the filing obligation.
HMRC applies automatic penalties for late or missing ERS returns. These can arise even where:
Penalties may increase over time where returns remain outstanding, creating both financial exposure and additional administrative burden.
If a scheme is no longer in use, employers must take active steps to formally cease it on HMRC’s system. A lack of activity does not remove reporting obligations.
To stop ongoing filing requirements:
Failure to complete this process will result in continued annual filing obligations, including nil returns.
ERS reporting sits alongside, rather than replaces, payroll reporting obligations. Certain share-related transactions may also need to be processed through payroll.
Steph Smith comments:
“This is particularly relevant for internationally mobile employees, where a single equity event may create obligations across multiple jurisdictions. Without coordinated processes between payroll and mobility teams, there is an increased risk of inconsistent reporting or duplicated effort.”
Managing ERS reporting alongside wider payroll and global mobility requirements can be complex, particularly for organisations operating internationally.
activpayroll can support you with:
Speak to our Global Mobility Specialists to discuss UK ERS reporting obligations.