How to stay compliant with UK share scheme reporting

Companies that offer employee share schemes have a number of annual reporting obligations to HMRC. While the process is generally straightforward, missing a filing or reporting deadline can have significant consequences for both employers and employees.

One of the most important dates in the compliance calendar is the 6th of July. If your company has granted shares, share options, or other securities to UK employees or directors, you’ll generally need to file an Employment Related Securities (ERS) annual return by this date. Depending on the schemes you operate, you may also need to submit an Enterprise Management Incentive (EMI) notification.

For companies with EMI options, the stakes are particularly high. Miss the relevant filing deadline and those options can lose their qualifying status, turning what was intended to be a tax-efficient incentive into an unexpected tax liability for employees and potentially additional National Insurance (NI) costs for the company.

In this blog, we’ll explain what needs to be reported, which filings apply to your company, and how to approach share scheme reporting with confidence.

What is an ERS return?

An ERS return is required for companies that provide shares, share options, or other securities in connection with employment or directorship to individuals in the UK. This applies whether the company is based in the UK or overseas, and covers formal share plans and one-off arrangements alike.

The return reports on activity during the previous UK tax year, which runs from the 6th of April to the 5th of April. For example, activity during a tax year must generally be reported by the 6th of July following the end of that tax year.

Once you have registered a scheme and made your first grant, the obligation to file continues every year. This is the case even if there hasn’t been activity on the equity. You simply submit what HMRC calls a nil return.

If this is your first time granting awards, you’ll need to register the scheme with HMRC before you can report against it.

What you need to report

Your compliance obligations typically span three return types, depending on the plans you operate, and each has its own HMRC template.

EMI annual return

This applies if you have outstanding EMI options. The return covers several categories of activity, each reported on a separate tab within the HMRC template. While HMRC requires the full template to be uploaded, you’ll only need to fill in the tabs where activity actually occurred.

The two most common tabs are released, lapsed, or cancelled – covering options that ended without being exercised – and non-taxable exercises, where qualifying EMI options granted at Actual Market Value (AMV) have been exercised. Most companies will only need these on a typical return.

The tabs that cause the most confusion are replacements and taxable exercises. In a restructure where EMI options are rolled over to a new holding company, the replacement options must be notified to HMRC as a new grant. If they aren’t, they won’t qualify as EMI options – an expensive mistake that’s easy to avoid if you know to look for it. On taxable exercises, where the option was granted at a discount or was exercised after it ceased to qualify, additional reporting is required around Unrestricted Market Value (UMV), section 431 elections, and NI. The remaining tab covers adjustments for variations in share capital, such as a share split, and is less commonly needed.

Each tab requires a specific combination of employee details, valuation data, PAYE references, and event information. NI numbers are mandatory on the annual return, and where an individual doesn’t have one, you need to follow HMRC’s specified format (typically “TN” followed by date of birth and a letter indicating the reason). Getting this wrong, or leaving fields blank, will cause the upload to fail.

For most companies, the challenge is having all the data in one place when you need it. Grant dates, exercise prices, AMV at grant, AMV at exercise, PAYE references, NI numbers – it all needs to come together in a single spreadsheet, formatted to HMRC’s exact specification.

Company share option plan annual return

The Company Share Option Plan (CSOP) return is shorter than the EMI return. It covers options granted, released, lapsed, or cancelled, and options exercised.

A key distinction from EMI: the CSOP return focuses on UMV rather than AMV. A CSOP option must be granted at a UMV that was agreed with HMRC, so this valuation data should already be available.

The exercise tab asks whether the exercise qualifies for relief – generally it will, provided the option has been held for at least three years. More fields on the CSOP return are optional than mandatory, but completing them now saves significant time if you face an audit or are preparing for a transaction down the line.

Non-tax-advantaged share scheme return

This return covers non-qualifying options and other securities such as Restricted Stock Units. You’ll need to report grants, exercises, releases, assignments, cancellations, and lapses of equity. One important exception is that if equity is released, assigned, cancelled, or lapsed for nil consideration, you don’t need to report that event on this return.

The HMRC template for this return is the longest of the three, with tabs for acquisitions, restricted and unrestricted securities, convertible securities, and more. Most won’t apply to your company, but they’ll all be there when you open the file. Knowing which tabs to ignore, and which you can’t, is part of the process.

Filing your annual return

Once your return is prepared, you’ll need to submit it through the HMRC ERS online portal. The process is straightforward, but a few things are worth noting.

If a scheme no longer has outstanding options and you don’t plan to make further grants, you can provide a “date of final event” to close it, removing the need to file nil returns going forward.

Save everything. Screenshot the submission page, note the reference number, and store them alongside the spreadsheet you uploaded. These details can be difficult to retrieve later, and you’ll want them readily available for any future audit or transaction.

The separate EMI notification

Annual returns are not the only obligation for the 6th of July. If you granted EMI options during the previous tax year, you’ll also need to notify HMRC of these grants. This is a separate filing from the annual return.

What to include

The notification requires employee name, NI number (optional for this filing, unlike the annual return), number of shares granted, strike price in GBP, AMV of the shares, and the cumulative UMV of all outstanding EMI and CSOP options held by the individual.

The cumulative UMV figure is particularly important. An individual can hold up to £250,000 worth of outstanding EMI options at any given time, measured by UMV at each grant date. Anything above that threshold won’t qualify for EMI treatment and will be taxed accordingly. This is based on UMV, not AMV, a distinction that catches people out.

Why it matters

If EMI options are not notified to HMRC by the 6th of July following the tax year of grant, they will not qualify as EMI options. When the individual exercises, the gain will be subject to income tax rather than the favourable EMI treatment. Depending on the circumstances, NI contributions may also apply. This includes an employer NI liability, which represents a direct cash cost to the company.

Submitting the EMI notification

The EMI notification is submitted through the same ERS portal as the annual return, but under “EMI notification” rather than “end of year return.” If you’ve made fewer than 30 grants, you can enter the details manually online. For larger volumes, it’s usually more efficient to upload a spreadsheet instead.

As with the annual return, it’s worth saving the summary page and reference number once the notification has been submitted. EMI options often come under close scrutiny during audits and transactions, so having a clear record of what was filed can save time later.

Changes coming in 2027

From the 6th of April 2027, the separate EMI notification will no longer be required for newly granted options. EMI grants will instead be reported as part of the annual EMI return. This means the final standalone EMI notifications will be submitted before the new rules take effect, reducing paperwork and simplifying the compliance calendar going forward.

From scattered data to submitted return

By the time a reporting deadline approaches, most companies have a reasonable idea of their reporting obligations. The challenge is pulling together the underlying data accurately and in HMRC’s required format.

For most companies, that means bringing together grant records, valuation history, employee details, NI numbers, PAYE references, and filing data from multiple sources.

If that data lives across spreadsheets, email threads, and adviser files, assembling it under time pressure is where mistakes can happen. Ledgy’s Equity Compliance platform brings your equity data – grants, exercises, cancellations, valuations, employee records – into one place, feeding directly into audit-ready compliance reports for EMI, CSOP, and non-tax-advantaged returns.

Automated error flags catch formatting issues and missing fields before you submit. Role-based access controls mean your legal, finance, and HR teams can collaborate on the filing without compromising confidentiality on sensitive equity data. The platform also maintains a full audit trail, helping ensure everything is readily available should an HMRC inquiry or transaction arise.

Review the report, export the relevant files, and upload them to HMRC. Companies using Ledgy for their ERS reporting can typically go from preparing their compliance report to submitting their return in a single sitting. That means less time spent chasing information across spreadsheets, reformatting data, or checking whether a missing field might cause the upload to fail.

Make equity compliance simpler

Managing annual returns and EMI notifications often means pulling together data from multiple systems, spreadsheets, and advisers. Ledgy’s Equity Compliance platform acts as a single source of truth, helping you reduce manual work.

Speak with our equity specialists to see how we can help you prepare and submit your filings more efficiently.