Do you need to file a s431 election?

Do you need to file a s431 election?

To use the section 431 election, the employee must pay for the UMV of the shares. The actual section 431 election document does not need to be sent to HMRC but should be filed safely by the company and provided to HMRC only if they ask for it.

What is s431 election?

The purpose of a section 431 election is to effectively ignore all/some of the restrictions in valuing the shares at acquisition/subscription and treat the shares as having been acquired at their UMV. The definition of restriction is wide and most private company articles contain ‘restrictions’.

What are employee related securities?

What is an Employment Related Security scheme? 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.

What is a s430 election?

A Section 431(2) election can be made at the acquisition date of any restricted securities. The effect is that certain specified restrictions on the securities are disregarded in determining the amount charged to tax as general earnings charge.

Are Founder shares employment related securities?

It should be noted that, as with any shares or share incentives acquired by an employee or director, there are potential tax implications for a founder of acquiring shares in the company, as the shares are most likely to be ’employment-related securities’ for tax purposes if the founder is either a current or …

Can AMV and UMV be the same?

The same price for both AMV and UMV is therefore proposed. Both values do not need to be agreed provided the price agreed represents at least UMV and options are granted at that price. There is then no need to agree an AMV.

What is an EMI option?

An Enterprise Management Incentive (“EMI”) scheme is an approved employee share scheme that is available to most trading companies, allowing employers to grant share options to key employee’s tax efficiently, as a reward for their efforts within the business and/or to retain and incentivise key staff.

What are employment related securities UK?

Securities are deemed to be employment-related if the opportunity to acquire them is made available by a person’s employer, or a person connected with a person’s employer, regardless of whether, as a matter of fact, the securities were acquired by reason of employment (with limited exceptions) (section 421B(3), ITEPA …

How do I close my HMRC ERS scheme?

To tell HMRC about the cessation of your ERS scheme, you’ll need the Government Gateway user ID and password you used when you told HMRC about the scheme. You’ll need to give a final event date. You must submit any outstanding returns until the date of cessation.

What are founder shares UK?

Founders’ shares are shares held (or originally held) by the founders of a company. In some cases the number of shares the founder may retain is proportionate to their period working for the company. This is done when founders are not just providers of capital, but people whose skills are needed by the start-up.

What is the umv of S431(1) securities?

An S431 (1) election under ITEPA03/S431 (1) was made, so the UMV of the old securities was earnings at the time of the award. On 1 January 2015 the UMV is £110. They are exchanged for 50 shares with a UMV of £100 and cash of £10.

Does itepa03/s431(1) apply to old securities?

Where an election has already been made for the old securities, then ITEPA03/S431 (1) states that sections 425 to 430 are not to apply to the old securities, so no charge can arise at the time of the exchange.

Who do I contact about employment related securities and share transfers?

If you have any questions regarding employment related securities, share transfers, s431 elections or establishing employee share schemes, please contact Lesley Stalker by emailing [email protected].

What are employment related securities?

Employment related securities is probably one of the most tortuous areas of tax legislation. Contained in ITEPA 2003 it should be considered each and every time shares are issued or value shifts into shares by reason of a transaction.