You must file employment information about the value of an employee share scheme (ESS) benefit you provide to an employee, even if no tax is withheld from the benefit.
What you need to tell us
You need to show the following information.
- The employee's name and IRD number.
- The value of the ESS benefit in the employee share scheme earnings field. ESS benefits have their own separate field and are not included in the gross earnings field.
- The value of the ESS benefit in the earnings not liable for ACC earners’ levy field (if the benefit is provided in shares).
- The total PAYE and any student loan deducted from the benefit.
Record the ESS income under the employee’s current tax code. The employment information return no longer has the ESS tax code option.
If the employer is funding the tax
If the employer is funding the tax (and student loan repayment, if it applies) on an ESS benefit, this amount is not part of the value of the ESS benefit. The amount is a separate extra pay and you report it in the gross earnings field.
Read more on our Tax Technical website about funding the tax cost on an ESS benefit.
IS 24/06 PAYE – How an employer funds the tax cost on an employee share scheme benefit
Former employees
You are not required to provide employment information about an ESS benefit provided to a former employee if that benefit is in shares and you have chosen not to withhold tax.
We recommend you let the employee know they will have to include the value of their ESS benefit in their income tax return - IR3 themselves and may have to pay tax on the shares.
Receiving employee share scheme benefits
When you need to tell us
You can either file the employment information on a payday basis or twice a month. Treat the ESS deferral date as the payday – this is 20 days after the share scheme taxing date.
Filing on a payday basis
If you’re filing on a payday basis, file the employment information within 2 working days of the ESS deferral date if filing electronically, or within 10 working days if filing by paper.
Filing twice a month
If your ESS deferral date is between the 1st and 15th of the month, treat the benefit as if the employee received it on the 15th of the month. If it's between the 16th and end of the month, treat the benefit as if the employee received it on the last day of the month.
The date you file employment information about the ESS benefit depends on whether you file your usual payday information electronically or by paper.
| File electronically | File by paper |
|---|---|
File information within 2 working days of:
|
File information within 10 working days of:
|
Voluntary disclosures
If you have not told us about ESS benefits provided in past years, let us know as soon as possible. You may wish to make a voluntary disclosure.