What are Employment Related Securities and when should they be reported?

If your company provides or transfers shares to employees or directors, it is likely that you will need to submit information about these on an Employee Related Shares (ERS) return to HMRC. On the return, you will need to tell HMRC about any new ERS schemes acquired by employees, and any schemes that have finished.

ERS schemes are a method for transferring shares to employees of the company, including directors. ERS schemes can either be tax-advantaged or non-tax advantaged. ERS applies to all types of share award such as growth shares, restricted shares, changes to share rights, share buy backs and options such as EMI, CSOP and unapproved options. 

All new ERS schemes need to be registered with HMRC because there may be income tax liabilities for the employees taking part in them, even if it is a one-off gift of shares.

Every year you will need to file an ERS tax return whilst the ERS scheme is active. The deadline to submit returns is by 6 July following the end of the tax year. Even if you aren’t actively transferring shares that year, but you have live ERS schemes, you’ll still need to submit a return – or a nil return each year in the following circumstances: 

• there have been no reportable events
• there have been no transactions
• you have appealed a late filing penalty
• the scheme has been registered in error or there’s a duplicate scheme
• you did not get a reminder from HMRC.

There are however circumstances where an ERS returns may not be required – for instance, a share transfer in the normal course of domestic, family, or spouses does not need a return. You also do not need to file an ERS return if the share transfer is to shareholders who are not employees or directors, or if the transfer of shares takes place before the company starts trading.

Failure to report on time will result in automatic penalties and loss of tax advantages for certain share awards.

The penalties range from £100 for missing the submission deadline, increasing to a £300 penalty if 3 months late, an additional £300 at 6 months late and from 9 months over the missed deadline, you will be charged £10 per day.  

If you are in any doubt about your obligation to file an ERS return or need further advice on how to complete and submit the form correctly, you can contact our tax team.

(E) enquiries@advaloremgroup.uk or (T) 01908 219100 (W) advaloremgroup.uk  

Payroll key updates for 2022

Tax codes

The personal allowance for 2022/23 remains at £12,570 with a tax code of 1257L. The onus is on the employee to ensure the tax code applied is correct – if an employee is not sure, they should contact HMRC on 0300 200 3300.

New employees

HMRC require either form P45 or Starter Checklist when processing a new employee as this determines the correct tax code to operate. Therefore, to process any new employee, we will also need these forms. The new starter checklist should be completed via the SAGE portal.

Right to work check

The notes below are for your information and the link will advise you accordingly. https://www.gov.uk/legal-right-work-uk

As an employer, it is your responsibility to ensure your employees have the legal right to work in the UK.  An employer who employs an illegal worker and has not undertaken a prescribed right to work check, will be liable for a civil penalty of up to £20,000 per illegal worker.  It is also a criminal offence to knowingly employ an illegal worker, or to employ a worker despite having reasonable cause to believe they may be illegal.   This offence could lead to a custodial sentence and an unlimited fine.

Student loan thresholds

Plan Type 1 – £20,195 (9% over threshold)
Plan Type 2 – £27,295 (9% over threshold)
Plan Type 4 – £25,375 (9% over threshold)
Postgraduate – £21,000 (6% over threshold)

Statutory maternity pay (SMP) – 39 paid weeks

Statutory paternity pay (SPP) – 2 consecutive paid weeks

This will increase from £151.97 to £156.66 subject to qualifying earnings.
Eligible smaller companies will still be entitled to claw back 100% plus 3% compensation against their monthly PAYE/NI liabilities. Larger companies remain at 92%.

Statutory sick pay (SSP)

This will increase from £96.35 to £99.35 subject to eligibility.

Directors’ national insurance threshold had increased

This has increased from £737 to £758 per month, giving an annual total of £9,096.

National insurance uplift

There are significant changes in relation to the National Insurance threshold for the tax year 2022/23. More information can be viewed here – What will the new Health & Social Care Levy mean for you? 
 
HMRC have instructed all employers to have the following message on payslips
“1.25% uplift in NICs funds NHS, health & social care.”  This will be applied from April 2022.
 
See below link for further information:
https://www.gov.uk/national-insurance/how-much-you-pay

Employment allowance

The employment allowance has been increased to £5,000 per year for eligible employers.
 
The following link provides further information relating to the employment allowance and eligibility: https://www.gov.uk/claim-employment-allowance

National minimim wage

The hourly rates from 1 April 2022 have increased as follows:

23 and above	£9.50
21-22 inclusive	£9.18
18-20 inclusive	£6.83
Under 18	£4.81
Apprentice under 19	£4.81
Apprentices aged 19 and over, but in the first year of their apprenticeship	£4.81

 
The apprenticeship rate only applies to apprentices aged: The apprenticeship rate only applies to apprentices aged:

• Under 19
• 19 or over who are in the first year of their apprenticeship.

Apprentices aged 19 or over in their second year of apprenticeship must receive the national minimum wage or national living wage rate their age entitles them to.

Auto enrolment

There is no change to the auto enrolment pension contribution thresholds.
  

Date effective	Employer minimum contribution	Staff contribution	Total minimum contribution
6 April 2022	3%	5%	8%
6 April 2021	3%	5%	8%

If you have any questions regarding the information above please do not hesitate to contact your payroll manager. 

(E) enquiries@advaloremgroup.uk or (T) 01908 219100 (W) advaloremgroup.uk