Accounting Solutions update: Employment related securities awareness and how it can affect your company

Published: Monday 9 May 2022

If you operate as a limited company, it is likely that any transactions involving the shares in the company and your employees (including directors) will need to be reported to HM Revenue & Customs. This could be the issue of new shares, the transfer of existing shares, or transactions involving share schemes and options over shares.

The details are submitted on an employment related securities (ERS) end of year return, and the deadline is 6 July following the tax year end.

There are instances where transactions are not reportable on an ERS return, such as share transfers in the normal course of domestic, family, or personal relationships, transactions that take place before the company starts trading and transactions involving non-employee shareholders. Advice should be sought if there is any doubt as to whether a transaction is reportable.

In certain circumstances, the transactions can give rise to tax and National Insurance liabilities for the company and the employee/director, and care needs to be taken to ensure any such liabilities are reported and settled in the correct way.

This area of reporting and the calculation of any liabilities arising on the transactions can be complex, so please seek advice from an accountant. More detail can also be found on HMRC’s website:

https://www.gov.uk/guidance/tell-hmrc-about-your-employment-related-securities

If you would like to take advice on ERS, then please contact Director Emma Boutcher at emma.boutcher@hazlewoods.co.uk or call 01242 237661.

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Emma Boutcher
Emma Boutcher
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