【KPMG Global】United Kingdom – 6 July Employee Share Plan Reporting Deadline; Registering Trusts

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2024-097 | April 23, 2024

GMS Flash Alert

Global Compensation

2024-097 | April 23, 2024

United Kingdom – 6 July Employee Share Plan

Reporting Deadline; Registering Trusts

U.K. employers must register any new reportable arrangements and file all Employment Related

Securities (ERS) annual returns with the U.K. tax authorities on or before 6 July 2024.1

Employers have an annual obligation to report any notifiable events that occur in relation to ERS

(i.e., shares or other securities that are acquired by reason of employment), or rights to acquire

ERS (such as employee share options or restricted stock units).

WHY THIS MATTERS

If employers do not meet their annual obligation to report notifiable events that occur in relation to ERS during

a U.K. tax year (a U.K. tax year runs from 6 April to 5 April) and file related returns for 2023/24 by 6 July 2024,

automatic penalties will arise.

Employers must be confident that the information provided in the annual returns is complete and correct and

can be reconciled with their payroll and corporation tax compliance positions.

Share-based awards held by international-mobile employees, where reporting, payroll, and corporation tax

requirements are not completely aligned, can present challenges. Employers should review their mobile

workforce carefully to identify any such difficulties and determine how these should be addressed.

Early preparation of the returns gives employers more time to make any required corrections to end-of-year

payroll withholding. It should also allow any historical errors to be identified and proactively managed through

voluntary disclosures to HM Revenue & Customs (HMRC), the U.K. tax authorities.

2024-097 | April 23, 2024

Process: In Brief

Any notifiable events must be reported to HMRC by submitting the relevant return(s) through ERS Online

Services by the deadline. This requires prior registration. HMRC uses the information provided in the annual

returns to help identify any errors in employer payroll withholding on equity awards, errors in U.K. corporation

tax relief claimed in relation to qualifying employee share acquisitions (e.g., where awards are ‘net-settled’ –

see below), and errors or omissions in employees’ personal tax returns.

Reporting Obligations

Overview

In summary, employers have an annual obligation to report any of the following events that occur in relation to

ERS during a U.K. tax year:

• Grants of rights to acquire shares or other securities (e.g., options or long-term incentive plan awards);

• Acquisitions of shares or other securities; and/or

• The lifting of restrictions (such as a risk of forfeiture) from shares or other securities.

These obligations also apply to certain other reportable events involving shares or other securities which are

acquired, or treated as having been acquired, by reason of employment. This applies regardless of where

the issuing company is incorporated, resident, or listed.

Events that occur outside a formal employee share plan, such as an acquisition of shares or grant of options

during a transaction, can also give rise to reporting obligations.

If no reportable events occur during a tax year in relation to a registered plan, a ‘nil’ return must be submitted.

Reporting U.K. Tax-Advantaged and Non-Tax-Advantaged Plans

Separate reporting obligations arise in relation to non-tax-advantaged plans (or other arrangements), and

each type of U.K. tax-advantaged employee share plan. Plans that attract non-U.K. tax advantages, such as

U.S. qualified employee stock purchase plans or Irish Approved Profit-Sharing Schemes, are ‘non-tax

advantaged’ for U.K. tax and reporting purposes.

KPMG INSIGHTS

For non-tax-advantaged arrangements, no reporting obligations should arise in relation to ERS awards held

by individuals who were not U.K. resident and had no U.K. duties throughout the relevant vesting period.

However, share-based awards should be reported where the employee had U.K. duties, or was covered by

the U.K. social security system, at any point over the vesting period of the relevant award.

Where internationally-mobile employees’ awards are reportable on both a U.K. ERS return and an equivalent

overseas return (e.g., an Australian employee share scheme return)2, employers should make sure that the

relevant entries on each country’s return are consistent with each other.

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©2024KPMGLLPaU.K.limitedliabilitypartnershipandamemberfirmoftheKPMGglobalorganisationofindependentmemberfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.PrintedintheU.S.A.2024-097|April23,20241GMSFlashAlertGlobalCompensation2024-097|April23,2024U...

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