The ERS submission — the employment-related securities annual return — is the filing every company must make by 6 July if its employees or directors acquired shares or options by reason of their employment in the previous tax year. It catches far more companies than realise it: not just formal share schemes, but the one-off share issue to an incoming director, the transfer to a key employee, the growth shares created last spring. And it carries an automatic penalty ladder that runs whether or not any tax was due, plus the sleeper feature that generates most of the penalties we untangle: once a scheme is registered, nil returns are mandatory every year until you formally close it.
Who has to file — the net is wider than "we have a scheme"
The trigger is securities or options acquired "by reason of employment", a phrase HMRC reads expansively: shares issued or transferred to employees or directors are presumed employment-related in almost all cases. That includes tax-advantaged schemes (EMI, CSOP, SAYE, SIP — each registered and returned separately) and everything else through the catch-all "other" return: unapproved options, growth shares, RSUs and LTIP awards, partly-paid shares, an employee buying in at a discount. The main carve-out in practice is founder subscriber shares at incorporation; almost any later issue to someone who works in the business is reportable, even where no tax arises — reporting and taxability are separate questions.
The mechanics: register each scheme or arrangement once through HMRC's ERS online service (inside the PAYE account), then file the annual return — on HMRC's spreadsheet templates — by 6 July after each tax year. Events reported include acquisitions, option grants and exercises, chargeable events on restricted shares, and net-settled awards. Section 431 elections are not filed, but the return asks about them, and the elections themselves live in your records for the diligence exercise that will one day ask.
The penalty ladder, and the nil-return trap
Miss 6 July and the charges are automatic: £100 immediately, a further £300 at three months, another £300 at six, and daily £10 penalties available from nine months — per scheme, per year. Material inaccuracies filed carelessly or deliberately can add up to £5,000. None of this requires any tax to have been at stake; the penalty attaches to the silence, not the money.
The trap that produces the saddest penalty letters: a company registers a scheme (sometimes speculatively, sometimes years ago for a plan that never launched), files once, forgets — and the nil-return obligation keeps generating £700-a-year penalty stacks for a scheme with nothing in it. The fix is housekeeping: file the nil returns you owe, then formally close dead schemes by entering a final event date — remembering the closed scheme's final-year return still needs filing — which switches the ongoing obligation off. A modest annual ERS routine (an hour where nothing happened; longer where awards did) prevents the whole category.
What changes for EMI in 2027
One genuine simplification is coming: for EMI options granted from 6 April 2027, the separate grant-notification requirement is abolished — grants will simply be reported in the EMI annual return, with the first such return covering 2027/28. Until then the current rule holds: EMI grants must still be notified by 6 July following the tax year of grant, and a missed notification still costs the option its EMI status — the single most expensive administrative failure in UK share schemes. Diarise both regimes through the transition; the old rule's last cohort (2026/27 grants) still needs notifying by 6 July 2027 even as the new world begins.
The recurring traps beyond the deadline
- The one-off issue nobody flagged. Corporate lawyers complete the share issue; nobody tells payroll or the accountant; the July deadline passes unnoticed. Any share movement involving an employee should trigger an ERS question by default;
- Internationally mobile employees — awards to staff who arrive or leave mid-vesting need apportioned reporting, and US-parent groups routinely assume the UK filing is someone else's job (see our RSU guide for the tax side);
- Net settlement reported wrong or not at all;
- Errors left uncorrected — amended returns are straightforward, and fixing a known error before HMRC or a due diligence team finds it is dramatically cheaper in both penalties and deal-credibility.
Making July boring
The companies that never think about ERS run a simple loop: a standing question in the company secretarial checklist ("any employee share movements this year?"), templates completed in May from the cap table rather than memory, nil returns filed with the real ones, dead schemes closed, and the EMI notification calendar maintained until 2027 retires it. It is an hour a year — against penalty stacks, lost EMI status and diligence findings on the other side of the ledger.
Acumon runs ERS compliance as part of share scheme administration — registrations, annual and nil returns, corrections and closures — through our employment tax team, alongside company secretarial where the share movements originate. If a share issue happened in your company last tax year and nobody mentioned ERS, the return is due — or overdue — now.