There are a number of circumstances when a UK employee or director receiving shares should complete an ITEPA S431 election
To minimise the risk of any future income tax charges under the 'restricted securities legislation', there are times when a UK employee or Director should be required to enter into a section 431 election within 14 days of the acquisition of shares.
For the purpose of activities on the Vestd platform, the key times are listed below:
1) On acquisition of conditional growth shares or ordinary shares.
2) On the exercise of EMI options, when the shares cannot be immediately sold and the exercise price has been set below the Actual Market Value (AMV) agreed with HMRC at the date of grant of the options.
3) On the exercise of EMI options, when exercised more than 90 days after the holder has become ineligible, and the holder has chosen for the tax at this point to be based on the Unrestricted Market Value, rather than the AMV of the shares at the time.
4) On the exercise of Unapproved options by a UK employee or Director, when the holder has chosen for the tax at this point to be based on the Unrestricted Market Value, rather than the AMV of the shares at the time.
Download the ITEPA S431 form here.
- Certain web browsers (e.g. Chrome) don't open the HMRC form. You can either try a different browser or right-click the link, click ‘Copy Link Address’ and paste the address in a new tab.
In most circumstances, all restrictions will be disapplied in Section 4 of the form.
Once the form is complete, both the employer and recipient should maintain a copy for their records. The employer doesn't need to submit the form to HMRC within the 14-day window, but they will need it when submitting an annual ERS notification.
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