As you may be aware, each year, a company is obliged to report to HMRC by 6 July information relating to its employment related securities, i.e., shares and securities in which employees and directors are interested, which includes employee share plans, option awards, growth shares or share awards to employees (“Share Schemes”).

The deadline for reporting for tax year 2025/26 (ending 5 April 2026) is midnight on 6 July 2026. If you operated an employee share scheme in the 2025/26 tax year, it is therefore time to consider your annual reporting obligations. Please note that as of 6 April 2024, the deadline for reporting enterprise management incentive (“EMI”) options is now aligned with other forms of tax-advantaged option plans (please see “Notification of EMI options” below).

You must detail all actions relating to Share Schemes which took place over the last 12 month period ending 5 April 2026, including:

• The grant and/or exercise of share options (but note that grants of EMI options are reported separately: see below)
• Where EMI or non-qualifying options have been exercised, cancelled or replaced
• Changes to the rights/restrictions of shares
• Employment loan release
• Award of restricted stock units (if applicable)
• Sales by employees of shares for more than market value
• Any event/action which has changed the share value of a participant’s shareholding or otherwise creates a tax charge

To emphasise, acquisitions of shares by employees or directors more generally will also need to be reported, such as growth shares or restricted/unrestricted shares, irrespective of whether these were acquired under a formal plan/scheme or not.

Note that even if no actions set out above took place, the company is still required to report this to HMRC by filing a nil return so as to avoid an automatic penalty. There is also no ‘de minimis’, so even in circumstances where the securities have a negligible value, this will need to be reported.

The information required to be provided varies depending on what exactly is being reported. For an issue of shares or exercise of options, the following information will need to be provided:

• company issuing the shares and address details
• PAYE reference of the employing company
• names and NI numbers of the employees
• number and type of shares awarded
• restrictions that could affect the market value of the shares
• whether the employee has made a ‘section 431’ election (so as to be taxed as though no restrictions on the shares apply)
• the market value of each share and amounts which employees have paid for the shares
• whether Income Tax and NIC were collected under PAYE

Importantly, should any return contain a material inaccuracy, then a penalty of up to £5,000 can arise.

Therefore, if you are unsure as to whether a particular event needs to be reported, please contact us as soon as possible so that we can provide advice.

Before you can make an annual return, your share plan must be registered with HMRC under the ERS online service, if it has not been done already. This can take a couple of weeks, so make sure this isn’t left until the last moment.

If you operate such an employee share plan, an annual return will need to be filed online by 6 July 2026 in respect of all your share incentive arrangements, whether to not they were put in place with a formal set of plan rules. Please note that HMRC does not issue reminders and so the onus is on you to ensure that the filing deadline is adhered to.

HMRC has provided templates for uploading data on employee share plans. Whilst you can use your own worksheets, they must be in exactly the same format as HMRC’s templates. It is important to note that templates will be rejected if the data, such as the format used for dates, is incorrectly formatted. In particular, HMRC has flagged that empty lines in templates will mean that any data below the empty line will not be captured. Please note that you will need the unique scheme reference number (which you will have obtained when you notified HMRC of the share scheme) for the filing of the annual return.

You can check your spreadsheet for formatting errors before submitting to HMRC via https://www.gov.uk/guidance/spreadsheetchecking-service-employment-related-securitiesers

Further information about registering your scheme and submitting annual returns can be found here: Tell HMRC about your employment related securities (ERS) schemes Tell HMRC about your – GOV.UK (www.gov.uk) and Submit your employment related securities (ERS) return – GOV.UK (www.gov.uk).

For those operating an EMI plan, it is important to note that as of 6 April 2024, EMI options granted from 6 April 2024 do not need to be notifies until 6 July following the end of the tax year (bringing them in line with other forms of tax-advantaged plans). However, given that the tax-advantaged nature of EMI options can be lost if grants are not correctly notified, we would strongly advise advise that EMI option grants are notified to HMRC as soon as possible and it is critical that EMI options granted between 6 April 2025 and 5 April 2026 are notified by the deadline on 6 July 2026. As always with notifications, it is best practice to take screenshots of the notification process for your records, should you need to produce evidence of any notification.

With recent changes to the EMI rules and reporting requirements, it may be time to give your scheme a health check, by updating the scheme rules to reflect the latest law and guidance and to ensure that your option scheme remains EMI compliant, particularly when granting new EMI options.

Please get in touch if you would like peace of mind that your EMI scheme remains up to date and fit for purpose.