Employment-Related Securities and Unlisted Companies is written with mainly private or unlisted companies in mind and explains in depth how the employment related securities (‘ERS’) rules in ITEPA 2003, Part 7 apply to employee share acquisitions generally, including:-
- Securities as earnings
- Restricted or convertible securities
- Securities acquired for less than market value
- Securities disposed of for more than their market value
- Post-acquisition benefits connected with securities
- Securities acquired under options
Part 7 consists partly of anti-avoidance rules relating to shares and other securities acquired or disposed of under the above categories. The rest of the legislation is concerned mainly with the tax-advantaged securities option arrangements, though the major emphasis in this work is on the Enterprise Management Incentives (‘EMI’) share option scheme. EMI options are of relevance mainly to unlisted companies due to the financial and other limits applicable.
The book also explores employee share acquisitions through various means, the relevant capital gains tax rules and corporation tax relief for employee share acquisitions. Basic share valuation methodology is discussed and though PAYE and NICs do not apply generally to unlisted company shares/securities, they may apply where a market exists for the securities or on the occurrence of events related to ERS. Lastly, the compliance requirements with regard to online registration of schemes, annual returns, penalties etc, are also featured.
The detailed commentary provided here aims to provide its target audience with as complete a guide as possible to both the technicalities and the practicalities involved in a wide variety of circumstances. The vast majority of companies registered at Companies House are owner-managed private companies. The employment-related securities (ERS) regime applies to all shares owned by directors or employees in the company or group they work for with few exceptions. This book is of importance therefore for all shareholder-directors and employees of such companies, and for their professional advisers.
Often the tax implications of the ERS rules are not onerous, but sometimes result in an income tax charge for the employee, and the company may also be obliged to pay PAYE and National Insurance Contributions. If a director or employee acquires shares free or for less than they are worth, they are liable to income tax on the difference. This book explains how the rules for taxing such share awards work, including the rules for non-HMRC approved share options and for options qualifying under EMI. There are also chapters dealing with CGT aspects of shares and share options, the PAYE and national insurance implications and the corporation tax deduction which may be claimed by the company.
Form 42 giving details of employee share acquisitions can be a perennial headache for companies and their advisers. This book explains in detail what the entries mean and how to complete these. There is no other publication of its type which deals with the ERS rules in depth and, as explained, this is a subject which all company owner-managers and their advisers need to be informed about.
