Client Alert U.K. Share Plan And Awards Reporting: What You Need To Do By July 6, 2026

The annual employment-related securities (ERS) filing window closes on July 6, 2026. If your business offered U.K.:

• share plans

• growth shares

• share awards

in the 2025/26 tax year, the deadline applies to you. Missing the deadline will result in automatic penalties and, for certain tax-favored plans, you will also lose the valuable tax-favored treatment.

Here's what you need to do, common issues to avoid and recent changes.

Four things you need to do by July 6

For the 2025/2026 tax year, if your company has U.K. employee share plans, growth shares or share awards, here's what you need to do by July 6:

• Register any new share plans or arrangements with HMRC (using their online system).

• Self-certify any new tax-favored plans (EMI, CSOP, SIP, and SAYE), to confirm they meet HMRC's qualifying conditions.

• Complete end of year returns for all share plans and arrangements.

• Notify any EMI option grants. Although the deadline for doing this is now July 6, it's better practice to notify grants as they're made during the tax year—it's one less thing to do when HMRC's systems are at their busiest!

You will need to register any new plans or arrangements before you can do your end of year reporting. You need to allow time to do this as it can take over two weeks.

ERS reporting covers both tax-favored and non-tax-favored plans and arrangements. Importantly, "arrangements" is not limited to formal share schemes. It covers any acquisition of employment-related securities by employees or directors, including growth shares, and restricted and unrestricted shares.

You will need to report any reportable events in the relevant tax year, including:

• option grants

• option exercises

• certain lapses of options

• share acquisitions

• events under the restricted shares legislation and anti-avoidance provisions.

Once a plan or arrangement has been registered, you will need to do an end of year return for that plan or arrangement even if there are no reportable events. If you don't submit a 'nil return', automatic penalties will apply.

What happens if you miss the deadline?

HMRC's approach to late ERS filings is straightforward: penalties are automatic and you will lose the tax-favored status of certain share options.

The automatic penalties are:

• GBP100 if you miss the July 6, 2026 deadline

• an additional GBP300 if the filing is still outstanding three months after the deadline

• a further GBP300 at the six-month mark.

On top of those fixed amounts, HMRC can impose:

• a GBP10 daily penalty if a filing remains outstanding more than nine months after the deadline

• a penalty of up to GBP5,000 for failing to immediately address a material inaccuracy in a return.

Your checklist

• If you're doing anything on HMRC's online system, take a screenshot of every stage for your records, whether it's your end of year reporting, EMI grant notifications or something else.

• Eligibility for EMI and CSOP is an ongoing requirement, not a one-time test. Always check that your company satisfies all applicable qualifying conditions before granting new options.

• If you have employees of a U.K. subsidiary who receive options over shares in a non-U.K. entity, it's easier for the U.K. subsidiary to deal with the online registration, self-certification, and reporting obligations.

• When employees leave, review option plan rules and individual agreements carefully. This ensures that you take the correct approach to the options and understand the tax consequences.

• It's easy to get caught out when using any discretions in your EMI or CSOP option plans or agreements. We can steer you through HMRC's guidance on using discretion in relation to option exercises or vesting of options, so you don't jeopardize the tax treatment of the options concerned.

What's changed?

EMI scheme now available to larger companies: If your company was previously unable to offer EMI, you should reassess your company's eligibility as the qualifying thresholds have been amended. The limits on the EMI scheme values and the exercise period have also changed.

PISCES and equity plans: The U.K. Government has introduced PISCES, a new private intermittent securities and capital exchange system that allows periodic trading in private company shares. Existing option agreements can, in some cases, be amended to allow options to be exercised and shares sold in a PISCES trading event, without losing the associated tax advantages. If you're considering whether your existing plan permits participation in PISCES trading events, or whether amendments are needed, we can work with you to add in the liquidity benefits without losing the tax benefits.

EMI grant notifications: what's changing from 2027?

The standalone EMI grant notification requirement only applies to options granted before April 6, 2027. For EMI options granted in the 2027/28 tax year (or later), grant notifications will be absorbed into the annual ERS return, with the first deadline for those returns falling on July 6, 2028. If your company has an active EMI program, you will need to allow extra time for your annual ERS return if you currently notify during the tax year.