Keeping our clients updated with practical business advice during the Covid-19 pandemic.

Visit our hub

Reporting of employee benefits and security transactions

Reporting of employee benefits and security transactions

To add value to an employee’s remuneration package often non-cash benefits are included. These may include company cars, private medical or dental insurance or a gym membership. Employees often see these as ‘perks’ of their job which helps to incentivise them.

After another year of difficult and changeable circumstances businesses are making their way to a new normal and part of that is needing to set challenging goals and targets. To meet these goals, businesses need their key employees to be motivated, dedicated to their roles and committed to the business. Gifts or awards of shares or share options are often a great way of demonstrating to employees that their input is much needed and can inspire them to work towards those stretch targets which will grow the business.

Whilst providing these exciting non-cash benefits and incentives to employees, it is important to remember that they usually result in HM Revenue & Customs (‘HMRC’) requiring certain reporting obligations to be fulfilled by way of submission of year end returns. The deadline for submission of the year end returns is 6 July 2022.

End-of-year expenses and benefits (forms P11D(b) and P11D)

Where directors and employees have been provided with taxable benefits, employers must consider whether form P11D will be required for the 2021/22 tax year and if any tax or National Insurance liabilities have arisen.

A comprehensive list of benefits can be found on the HMRC website here, but most common items include company cars and fuel benefit, professional subscriptions, private health or dental insurance. The rules around less common benefits such as loans, accommodation, and entertaining should also be carefully considered.

Employment Related Securities (“ERS”) and Employment Management Incentive (“EMI”) End of Year Returns

Where there has been any type of equity transaction or share plan during the year to 5 April 2022, it is almost certain that a return will need to be submitted to report these events.

Additionally, where such transactions have been reported in prior years, or a share plan remains open, there will be an ongoing filing requirement even if no new transactions have taken place. If a scheme has ceased during the year, HMRC will also require notification of this as well.

Call to action

Don’t let the incentives become your disincentive! Late returns trigger automatic penalties. You can rely on us to help with all aspects of your reporting requirements, ensuring that your compliance needs have been dealt with in a timely and professional manner.

Get in touch with our specialist team led by Kimberley Mulcahy on 01892 546546 to find out how we can help you.