In brief

HMRC has published its Employment Related Securities Bulletin 47 containing updated guidance on Employment Related Securities (ERS) annual return templates. HMRC is introducing changes to the ERS annual return templates from 6 April 2023, which will require mandatory completion of the:

  1. 'PAYE reference of the employing company'
  2. 'Is PAYE operated Y/N'
  3. Employee's National Insurance number

The guidance also includes clarifications to the 'HMRC valuation reference' column. Please see further details and commentary below.

Key points

The ERS end-of-year return template guidance and technical notes will be published in February 2023. However, the templates and submission checking service will be updated from 6 April 2023.

  1. PAYE reference

Stating the PAYE reference for the employing company will become mandatory from 6 April 2023. The employing company should be the company that has the PAYE obligation. This new obligation will likely cause issues for those non-UK employer or resident directors of non-UK who don't operate PAYE but choose to submit ERS returns. HMRC has not provided further detail on this point.

Grantor PAYE reference, PAYE reference of company whose securities under option and company whose securities acquired will remain optional on the 'Other return'. This is important for awards granted over shares in an overseas parent company that may not necessarily have a PAYE reference if it does not have UK employees.

  1. PAYE operated

Companies will need to state whether or not they have operated PAYE. The form gives no further ability to explain or detail why PAYE was not operated.

  1. National Insurance 'NI) number

The HMRC guidance covers circumstances where an individual needs to be included on the return but does not have an NI number. A supplementary reference will need to be generated based on the individual's date of birth and reason why the individual does not have an NI number. This means that companies will need to provide enhanced details of the individuals in question in order to prepare these supplementary NI numbers.

The supplementary NI number is only to be used for the purposes of the annual return. It should not be given to the individual or used in any other correspondence with HMRC. The reference will not be used by or shared with any other HMRC services.

  1. HMRC valuation reference

This column is being amended to make clear that if a share valuation has been agreed with HMRC, the share valuation needs to be provided. The exact columns to be changed will be detailed in the updated technical specifications that will be published in February 2023.