21 February 2023
HMRC has announced that there will be changes for all Employment-Related Securities (ERS) returns submitted after 5 April 2023 both for non tax-favoured arrangements (formerly Form 42) and for tax-favoured arrangements :
● It will be mandatory for the employing company PAYE reference to be reported on the form
● The operation of PAYE also needs to be confirmed
● The National Insurance number field for each employee will be compulsory.
HMRC’s Employment Related Securities Bulletin 47 states that if an employee does not have an NI number, the following format must be used to generate a 9 character reference (2 letters, 6 numbers and a letter) to be used only in the annual return template:
1. “TN”, to indicate an ERS reference that cannot be used for any other purpose;
2. The employee’s date of birth in format DDMMYY; and
3. the “no NI number reason identifier” (X, Y or Z): X means the employee is under 16 years old,
Y means the employee has applied for, but not yet received, an NI number and Z means the employee has never paid NICs, because they have never been liable for them (for instance because of continuing social security coverage in another country). HMRC is yet to publish its revised template and guidance notes. We expect these to be made available by the end of February / early March.
REMEMBER – Thursday 6th July 2023 is the deadline for filing your 2022/23 ERS Forms
How Does This Impact Us?
The changes announced by HMRC do not on the face of it seem like big changes, simply changing a few fields from optional to mandatory, however for a company undertaking the data gathering process, this will be a big lift. You will now have to ensure that
1. Payroll provides the PAYE reference for each individual on the ERS returns
2. Payroll is able to provide confirmation of whether or not they reported the income and remitted PAYE to HMRC
3. Payroll provides the NI number for each individual
4. For anyone who does not have an NI number, you will need to ensure payroll provides why they do not have an NI number and you will also need to ensure you are able to gather their date of birth to include.
Historically companies have found the data gathering for the ERS forms onerous and therefore did skip on fields, such as the above, because of this, especially where there was no communication with the UK payroll departments during the process. We would recommend that with these new requirements, companies start to consider their data gathering requirements sooner rather than later.
How Can Vialto Partners Help?
Vialto Partners has a dedicated team and tools to help you with the preparation of your ERS returns for 2022/23 (and earlier years)
● Need help in how to register your plan (or deregister schemes)? Our team knows the HMRC portal extremely well and can walk you through or provide you with a guidance document.
● Incomplete data could result in your returns being rejected on submission – we can help with a format review to make sure your return will get accepted first time.
● Want help in the data you need to gather this year? We can provide you with a template to help you ensure you gather all the relevant information.
● We can complete your returns entirely for you, or we are more than happy to answer questions, walk you through the HMRC systems or review returns you have prepared yourself. Our team are ready to help you get your returns completed and submitted to HMRC on time and first time!
Contact us
Please reach out to your usual Vialto Partners contact or one of the below should you have any questions on the above.
● Gemma Ludwig – gemma.ludwig@vialto.com | +44 (0) 7483 342129
● John Pritchard – john.h.pritchard@vialto.com | +44 (0) 7738 310451
Further information on Vialto Partners can be found here: www.vialtopartners.com
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