ERS and EMI Reporting: The filing deadline you can’t ignore!

It’s that time of year again – Spring is well under way, the sun is starting to shine… and the 6 July deadline for Employment Related Securities (ERS) and Enterprise Management Incentive (EMI) Annual Returns is looming.

The requirements

It has become increasingly popular for companies to incentivise and retain their employees by issuing shares or granting share options.

However, where a company has issued shares or granted share options to employees, directors or office-holders, they may be subject to HMRC’s Employment-Related Securities (ERS) reporting regime. This includes arrangements under tax-advantaged share schemes, such as Enterprise Management Incentives (EMI), as well as non-tax-advantaged share awards and options.

The returns cover the tax year, currently 6 April 2025 – 5 April 2026 and are due for submission to HMRC by 6 July 2026.

What needs to be reported?

The ERS / EMI returns are an annual online filing to HMRC that reports share-related transactions involving employees or directors during the tax year. These transactions may include, but are not limited to:

• The grant, exercise, lapse or cancellation of share options
• The acquisition or disposal of shares
• Variations to share rights
• Certain share reorganisations or exchanges
• Adjustment, replacement or disqualifying events for EMI options

ERS obligations apply even where no income tax or NIC arises, and filings are required for each registered ERS scheme.

Common pitfalls and the consequences

• They can be complicated! ERS and EMI reporting can be extremely complex; therefore, we would always encourage any companies who believe that they are required to file a return to contact their adviser as early as possible to allow enough time to prepare and submit the annual returns before the submission deadline
• No reportable transactions, so don’t need one? Unfortunately, this is a common misconception. If a scheme has been registered with HMRC and is still open, then a nil return will still be required to be filed with HMRC, even where there are NO reportable transactions during the period. Where no further future transactions are required under a scheme, we can help you formally close the scheme in order to negate the requirement for future nil returns
• You may need to register your scheme with HMRC before you can submit. If you have granted share options or issued shares to employees or directors for the first time during the 25/26 tax year, you may need to register a scheme with HMRC before you are able to file your return (assuming this has not been completed already). This can take time, so again, we would always recommend contacting your adviser at the earliest possible opportunity where assistance is required
• No longer an employee, so no need to report. This is not necessarily the case – the ERS legislation applies to past, present and future employees, directors and office-holders. So an option granted to a director before taking up employment or after ceasing employment may still need to be reported

And what if you don’t submit the return?

As with all statutory HMRC filing requirements, if you don’t file on time, then penalties are automatically issued by HMRC.

Missing the 6 July deadline will lead to an automatic £100 penalty, which is followed by further penalties if the return is a further 3 months late (£300), or 6 months late (£300, in addition to the £100 penalty and 3-month penalty).

Additionally, if the returns are more than 9 months late, HMRC may apply further penalties of £10 a day!

Other consequences -  A due diligence nightmare

EMI and ERS annual returns are a common area of investigation on Due Diligences during an acquisition process. Therefore, filing them on time, and ensuring the reporting is correct is imperative as getting this wrong can lead to downward negotiations for any future potential purchasers.

And remember, if filing yourself, the online HMRC system does not allow you to keep any records of the submission made. Therefore, we always recommend screenshotting any submission pages and keeping these, along with the submission receipt, safe for future reference.

What next?

At James Cowper Kreston, we have a dedicated and specialist team ready to help you. If you require any assistance with your ERS or EMI annual return, please contact us here, so that we can help you maximise your potential.