Equity and share-based compensation are powerful tools for attracting and retaining top talent in the UK, but they come with a compliance obligation that catches many global employers off guard: HMRC Employment Related Securities (ERS) annual reporting.
Whether you’re operating through an Employer of Record (EOR) or a direct UK entity, if you are granting equity in the UK, you almost certainly have an ERS filing obligation. Miss the deadline and you’re looking at automatic penalties, even if there’s nothing to report.
What Are ERS Filings?
Employment Related Securities (ERS) is HMRC’s framework for tracking equity and share-based awards granted to employees and directors in connection with their employment.
This covers a broad range of instruments, including but not limited to:
- Stock options
- Restricted Stock Units (RSUs)
- Employee Share Purchase Plans (ESPPs)
If any of these have been granted to, or exercised/vested by, workers on a UK payroll, even if the issuing company is incorporated overseas, you must register the arrangement with HMRC and file an annual ERS return.
The Tax Year and Deadlines You Can’t Afford to Miss
The UK tax year runs from 6 April to 5 April the following year. ERS annual returns must be submitted online via HMRC’s Government Gateway online services.
| Milestone | Date |
| UK tax year end | 5 April |
| ERS annual return deadline | 6 July (same year) |
| New scheme registration (if applicable) | 6 July, following the first grant |
For the 2025/2026 tax year (6 April 2025 – 5 April 2026), all ERS returns are due by 6 July 2026.
Critically, the obligation to file exists even if there were no reportable events in the tax year; a nil return must still be submitted for any registered scheme. Late or missing returns trigger automatic fixed penalties starting at £100, escalating the longer they remain outstanding.
EOR vs. Direct Entity: Who Is Responsible?
This is where many global companies get tripped up. The answer depends on your UK employment structure.
Employer of Record (EOR)
When you engage a UK workforce through an EOR, the EOR is the legal employer of record for employment law and PAYE purposes. However, ERS reporting obligations follow the economic reality of who is granting the equity, typically the parent or client company, not who is running payroll.
Under an EOR arrangement:
- The EOR handles PAYE, income tax and NICs on any taxable equity events (such as option exercises or RSU vesting), typically via payroll.
- The annual share plan returns the responsibility applies to multiple companies (e.g., employer and Issuer), but falls away once one company has submitted the return. Therefore, in theory, the Issuer could also complete the annual share plan return. However, given that the local EOR will have a UK PAYE reference, it is best placed to submit the annual share plan return.
- You will need to ensure your EOR partner has visibility of all equity events (grant dates, exercise dates, vesting schedules, valuations) in time to meet both the payroll withholding requirements and the 6 July filing deadline.
- If your EOR is not proactively managing this handshake between equity events and PAYE, the compliance gap falls on you.
Good EOR providers will have processes in place to flag equity events and support withholding, but the ERS registration and filing itself typically remains the client company’s responsibility unless explicitly contracted otherwise.
Direct UK Entity
If you have your own UK subsidiary or branch, the obligations are more straightforward, and more squarely on your shoulders:
- Your UK entity is responsible for registering all share schemes with HMRC (via PAYE Online) before the 6 July deadline following the year of first grant.
- Annual ERS returns must be submitted for every registered scheme, even in years with no activity.
What Needs to Be Reported
The content of your ERS return varies by scheme type, but generally covers:
- Grants: number of options/shares granted, exercise price, market value at grant and any valuation agreed with HMRC
- Exercises and releases: date, number of shares, market value on the day, amount paid by the employee
- Lapses and cancellations: options that have lapsed or been cancelled during the year
- Disposals: where employees have sold shares that may affect any relief claimed
- Valuations: particularly relevant for unapproved schemes and EMI options, where HMRC-agreed valuations underpin the tax treatment
All of this information must be accurate and complete. Errors or omissions can trigger HMRC enquiries.
Don’t Let Equity Compliance Be an Afterthought
ERS compliance is one of those obligations that sits in an uncomfortable grey zone: it touches equity/legal, HR, payroll and finance, and it’s easy for each team to assume someone else has it covered. The reality is that with global workforces, equity plans administered from overseas and complex EOR structures, the pieces don’t always join up automatically.
The consequences of getting it wrong go beyond penalties.
How GoGlobal Can Help
Navigating UK ERS compliance is complex enough on its own. Layer in a global workforce, cross-border equity plans and the nuances of EOR versus direct entity structures, and it quickly becomes a full-time challenge.
GoGlobal’s team of global employment experts takes the guesswork out of UK equity compliance. From ensuring your EOR arrangement has the right equity event workflows in place to supporting your direct UK entity with ERS registrations and annual return preparation, GoGlobal brings the operational rigour and local expertise to keep you on the right side of HMRC, without the administrative burden falling entirely on your internal team.
Whether you’re granting your first UK employee options or scaling a large international workforce with complex equity programmes, GoGlobal is here to help you hire compliantly, pay accurately and report on time.
Ready to simplify your UK compliance? Or have questions on granting equity in other countries? Contact us to schedule a call.
