Share Schemes: News Archive

Contents

2007

15 November

Important Changes to Share Scheme information returns
The amount of information that companies have to provide on their share scheme returns for 2007/08 and later years has been reduced. Copies of the revised returns are now also available.

25 July

Change to the rules on the taxation of employment-related securities (PDF 21K)
Regulations have been laid to amend the definition of securities for the purpose of the employment-related securities legislation. The list of securities in section 420 ITEPA will now include alternative finance investment bonds, a type of Islamic finance arrangement.

24 July

Employment-Related Securities, A Guide to completing Form 42 (PDF 419K)
Minor amendments have been made to the Form 42 guidance which replaces the February 2007 version.

25 May

Enterprise Management Incentives (EMI) Survey 2007
HMRC has commissioned Ipsos-MORI, an independent research company, to carry out research into tax-advantaged Enterprise Management Incentives (EMI), to enable HMRC to assess whether any reported effects suggest that EMI has met its policy objectives.

23 May

Share Focus – Issue 5 (PDF 110K)
The fifth edition of Share Focus, the newsletter of the Employee Shares & Securities Unit, has now been published.

25 April

Revised joint NICs elections
Following the new Social Security (Contributions) (Amendment) No. 3) Regulations 2007 which came into force on the 6 April 2007 we have now updated the model joint NICs election.

13 April

Online filing of Employee Share Schemes returns and information - FAQs
A Press Release was published on the 6 April announcing the introduction of online filing of Employee Share Schemes returns and information. We have also published some frequently asked questions.

19 March

Online filing of Employee Share Schemes returns and information
Regulations and explanatory memorandum about the use of approved methods of electronic communications for the delivery of information have now been laid and published.

13 March

Share Focus – Issue 4 (PDF 90K)
The fourth edition of Share Focus, the newsletter of the Employee Shares & Securities Unit, has now been published.

27 February

Share Schemes - Information returns for the year ending 5 April 2007 (PDF 69K)
The following return is now available - Enterprise Management Incentives (EMI) - Form EMI40 (2007).

8 February

Share Schemes - Information returns for year ended 5 April 2007
new versions of information returns have now been published.

24 January

Form 42 – Tax Bulletin 86
A Press Release dated 29 November 2006 and re-published in Tax Bulletin 86 headed ‘Quicker and simpler tax system for small businesses’ incorrectly reported the withdrawal of Form 42’. Form 42 has not been withdrawn and the text has now been corrected. Detailed guidance on when a Form 42 is required.

 

2006

7 December

Employment Related Securities Manual
Guidance on post acquisition benefits from securities has now been incorporated in the Employment Related Securities Manual and can be found under ERSM90000.

2 September

Model documents – Save As You Earn Share Option Scheme (SAYE)
Revised model documents for SAYE have now been published.

Approved Save As You Earn Share Option Schemes – Guidance for employees (RTF 128K)
Revised guidance for employees on approved Save As You Earn Share Option Schemes has now been published. This replaces booklets IR97 and IR98 which have been withdrawn.

Approved Save As You Earn Share Option Schemes – Guidance for employers and advisers (PDF 122K)
Revised guidance for employers and advisers on approved Save As You Earn Share Option Schemes has now been published. This replaces booklets IR97 and IR98 which have been withdrawn.

21 August

Post-acquisition benefits from ratchets
Answers to FAQs 4(a) and 4(c) have been withdrawn and revised guidance published.

30 June

National Statistics on tax-advantaged employee share schemes
National Statistics on tax-advantaged employee share schemes statistics for 2004-05 are published today, covering Share Incentive Plan (SIP), Save As You Earn (SAYE), Company Share Option Plan (CSOP) and Enterprise Management Incentives (EMI).

20 April

Company Share Option Plans - Guidance for employees
Revised guidance for employees on Company Share Option Plans has now been published. This replaces booklets IR101 and IR102 which have been withdrawn.

Company Share Option Plans - Guidance for employers
Revised guidance for employers on Company Share Option Plans has now been published. This replaces booklets IR101 and IR102 which have been withdrawn.

6 April


Phantom Share Plans
We are aware of concerns that have been raised on the recent draft legislation in Clause [j1021] published on 22 March 2006.

31 March

Employment-Related Securities – A guide to completing Form 42 (PDF 266K)
We have made changes to the guidance on the reporting requirements for newly incorporated companies. Please see page 6. Other amendments to some of the examples have also been made.

21 February

Share Schemes - Information returns for the year ending 5 April 2006
The following return is now available - Profit Sharing Scheme - Form 30 (2006). Explanatory notes are incorporated in the form.

06 February

Share Schemes - Information returns for the year ending 5 April 2006
The following returns are now available - Share Incentive Plan - Form 39 (2006) and Enterprise Management Incentives - Form EMI 40 (2006).

17 January

Share Schemes - Information returns for the year ending 5 April 2006
The following return is now available - Company Share Option Plan (CSOP) - Form 35 (2006).

2005 News Archive

22 December

Employment-Related Securities Manual
New material in the Employment-Related Securities Manual (ERSM) has been released. It contains guidance on the taxation of employment-related securities under Part 7 of the Income Tax (Earnings & Pensions) Act 2003 (ITEPA 2003). Material is being released in instalments, this being the second instalment.

13 December

Share Schemes - Information returns for the year ending 5 April 2006
SAYE - Form 34 (2006) return is now available.

9 December

Transfer-pricing and Employee Share Plans
New guidance (updated 5/12/05), has been prepared for accounting periods starting on or after 1 January 2005.

6 December

Corporation Tax (CT) deduction for shares acquired by employees from Enterprise Management Incentive (EMI) share options
Schedule 23 Finance Act 2003 provides for a specific CT deduction for employee share acquisition.

1 December

Employment-Related Securities Manual - Guidance on reporting requirements (PDF 681K)
Following publication of the new Form 42 guidance on the 28 November, the relevant section of the Employment-Related Securities Manual (ERSM140000) is in the process of being updated to reflect the changes. The new guidance will, in due course, be incorporated into the manual.

28 November

Employment-Related Securities and Options - Form 42 for year to 5 April 2006
We have published today a copy of the information return Form 42 to be used for the year to 5 April 2006. This is the form on which companies need to tell us about employment-related shares and securities. Guidance on how to complete the form has also been published.

Employment-related securities – Reporting Requirements and Form 42
The Chancellor of Exchequer today announced revision of the rules on reporting of employment-related securities, the main feature of which is the abolishing of the requirement for most new small companies to report details of founder shares.

22 November

Enterprise Management Incentives (EMI) - A guide for employees, employers and advisers
We have updated guidance on Enterprise Management Incentives. This guidance replaces booklet IR2006 which has been withdrawn.

10 November

Enterprise Management Incentives - New form to notify an option grant
We are pleased to publish the new notification Form EMI1 for companies to notify options granted to employees. This replaces the specimen notice which has now been withdrawn. A copy of the option agreement does not have to be sent in with the new form, but the company and employee will need to keep copies for their own records and these will have to be produced if required by us. The new form can be completed On-line but must still be printed off and signed before it is returned to:

Small Company Enterprise Centre
Centre for Research & Intelligence
Ty Glas
Llanishen
Cardiff
CF14 5ZG

19 October

Employment-related securities - Reporting Requirements and Form 42 (PDF 121K)
The informal consultation on Form 42 and the reporting process for employment related shares and securities ended on the 22 September 2005. We are grateful to all commentators who sent in the responses to identify improvements. We are analysing the responses and will publish a consultation summary as soon as this process is complete.

11 October

The National Insurance Contributions Bill
The National Insurance Contributions Bill was introduced in the House of Commons on 11 October 2005.

7 October

Share Incentive Plans - A guide for Employers and Advisers (PDF 430K)
We have updated guidance on the Share Incentive Plan. This guidance replaces booklet IR2005 which will be withdrawn shortly. Separate guidance is available for employees

30 September

Enterprise Management Incentives (EMI) (PDF 2.9M)
We have today published the findings of qualitative research among companies using EMI share options to incentivise employees.

2 September

Share Incentive Plans - A guide for employees (RTF 82K)
This guidance explains the rules of Share Incentive Plans and the tax and National Insurance advantages that apply when you take part. It replaces booklet IR2002 which is no longer available. Guidance for employers and advisers will follow.

25 August

Transfer-pricing and Employee Share Schemes
New guidance has been prepared for accounting periods starting on or after 1 January 2005.

3 August

Publication of New Technical Guidance Manual on Employment-Related Securities
The new Employment-Related Securities Manual (ERSM) is released today. It contains guidance on the taxation of employment-related securities under Part 7 ITEPA 2003. Material is being released in instalments, with priority being given in this first release to guidance for the most common situations.

1 July

Employment-related securities - Reporting requirements (PDF 121K)
A Partial Regulatory Impact Assessment (RIA) was published today to look at ways to improve the process of reporting information on employment-related securities by employers on Form 42. The aim is to reduce the compliance burden and administration costs on businesses. We are informally consulting with external stakeholders and the informal consultation will start on 1 July 2005 and last for 12 weeks to 22 September 2005.

3 June

Employment-related Securities - Help with Form 42
We have updated the ‘Help with Form 42’ guidance. Revisions have been made to ‘Bonus issues’, ‘Rights issues’, ‘Scrip Dividends’, ‘Dividend Re-Investment Plans’ and ‘newly incorporated companies’.

28 April

Research Institution Spinout Companies
Finance Act 2005 includes a new measure to help employees of Research Institutions (RI) who acquire or have acquired employment-related shares in spinout companies. Guidance on how this provision will operate and approved election forms are now available on our website

4 April

The taxation of Share Options: Internationally mobile employees: an update.
We have produced an article on Share incentives made available to internationally mobile employees. This article will also be published as Tax Bulletin 76 and will be made available by the end of April 2005.

8 March

Companies incorporated in the year ended 5 April 2005 - Simple reporting form (PDF 27K)

Further to our ‘What’s New’ entry on the 24 February we are pleased to publish the simple report form which newly incorporated companies can use for the year ended 5 April 2005. This form can only be used by companies that incorporated in the year ended 5 April 2005 where shares, that do not have any restrictions (see page 14 of guidance) attached to them, have been acquired by directors/employees.

If you do not fall into this category but still have reportable events you should use the Form 42 (2005) (PDF 109K).

Also published today is the guidance (PDF 176K) to help complete this simple form and the Form 42 (2005).

If you need any help in completing the forms or you need advice about the reporting requirement please e-mail us at:

24 February

Employment-related securities and options - Form 42 for year to 5 April 2005 (PDF 82K)

We have published today a copy of the information return Form 42 to be used for the year to 5 April 2005. This is the form on which companies need to tell us about employment-related shares and securities. Details are available for events that have to be reported. Only those sections of the form where there is something to report, and the declaration in Section 7, have to be completed.

Companies can continue to use a substitute form provided it is in the same format and provides the same information requested by Form 42. Companies incorporated in the year ended 5 April 2005 that have issued unrestricted shares only need to complete sections 5 and 7 of Form 42. We will be providing, on this website, a simple form for these companies to use shortly.

Form 42 will only be issued to companies where we think that there are likely to be reportable events. In such cases we will issue the form on or after 6 April 2005. If a company is issued with the form it must complete the form and send it back by 6 July 2005. Where a company is issued with the form and has nothing to report it must make a 'Nil' return by ticking the box in Section 6, signing the declaration in Section 7 and returning the form by 6 July 2005. Failure to do this may lead to penalties being imposed.

Where a form 42 is not issued to a company, it must still tell us about any reportable events by 6 July 2005. A copy of the form can be downloaded from the web site to use for this purpose. Failure to tell us about reportable events within the time limits may lead to penalties being imposed. Companies do not have to make a 'Nil' return where they have not been issued with a form 42 and there are no reportable events.

Detailed guidance to help companies complete the form will be available on this site by the end of February.

If you have any enquiries about Form 42 or how to complete it you can e-mail us at shareschemes@ir.gsi.gov.uk

We would like to acknowledge here the helpful feedback we have had from practitioners and companies who have to use the form. We have incorporated your suggestions into the form wherever possible, and we continue to welcome constructive suggestions for improving the form in future.

15 February

Help with Form 42
Further to our announcement on the 7 February regarding Form 42 (2005) additional guidance on completing the form will also be made available on this website by the end of February.

10 February

Tax boost for research 'spinout companies'
On the 2 December 2004 the Chancellor in his Pre-Budget Report confirmed a measure to remove a tax barrier to researchers developing intellectual property through spinout companies created with universities and other research institutions. Further to this confirmation the Inland Revenue has now published draft legislation and Explanatory Notes which give details of how the new measure will work. A News Release has also been published.

7 February

Share Schemes: Information returns for the year ending 5 April 2005
Returns are now available for the following approved schemes:

  • Profit Sharing
  • SAYE
  • Company Share Option Plans
  • Share Incentive Plans
  • Enterprise Management Incentives.

Form 42(2005) which asks for details of reportable events in relation to employment-related securities and options will be available here shortly.

4 February 2005

Tax and National Insurance contributions avoidance: employment-related securities
Further to the Government’s announcement at Pre-Budget Report on tackling tax and NICs avoidance, the Inland Revenue has now published draft legislation (PDF 113K) and Explanatory Notes (PDF 39K) amending Part 7 of the Income Tax (Earnings and Pensions) Act 2003. A News Release has also been published.

2004

21 December 2004

Transfer pricing and Employee Share Schemes
 The Inland Revenue published an updated version of its International Manual on the 17 December reflecting recent changes to the transfer pricing rules. Draft guidance (PDF 82K) is available relating to the link between these rules and Schedule 23 of Finance Act.

1 December 2004

New address and new name for Share Schemes!

You may have heard that many Inland Revenue staff are moving out of Somerset House. The Share Schemes Team is involved in the move during the period 1 to 7 December 2004. Our new address will be:

Room G52
1 Parliament Street
London
SW1A 2BQ

We are also taking this opportunity to change our name to better reflect the variety of our work and our wide customer base. Our new name is the Employee Shares and Securities Unit (ESSU).

Current Inland Revenue phone numbers will not be transferred to 1 Parliament Street. If you are unable to get hold of a contact in the ESSU, please use the Somerset House switchboard number and they will transfer you. The number is:

020 7438 6622

Our new telephone numbers have now been published and are available by visiting Contact Us.

Our fax numbers are:

020 7147 2746 and 2747

27 September

Recouping employees NICs
Guidance has now been produced for employers on recouping employees NICs on securities based remuneration

23 August 2004

Extension of Joint NICs Elections and Agreements to restricted and convertible shares

Following Royal Assent of the National Insurance Contributions and Statutory Payments Act 2004 and the Finance Act 2004, as well as the laying of National Insurance amendment regulations in the form of Statutory Instrument 2069/2004, we have now updated our guidance on Joint NICs Elections and Agreements to reflect these changes. We have also produced revised Model Election formats.

10 August 2004

Extension of Joint NICs Elections and Agreements

The Commencement Order for the National Insurance Contributions and Statutory Payments Act 2004 (NICs Act) has been made and brings Sections 3 and 4 of that Act into force from 1 September 2004.

The corresponding Regulations were laid on the 5 August 2004 and will also come into force on the 1 September 2004. Sections 3 and 4 of the NICs Act extends the opportunity to use Joint NICs Elections & Agreements to transfer the employer’s Class 1 NIC liability arising on post-acquisition earnings from employment-related awards of restricted and convertible securities.

The Commencement Order for section 85 and Schedule 16 of Finance Act 2004 was also laid today and will come into force on the 1 September 2004. Schedule 16 provides income tax relief to employees who bear the employer’s NICs on earnings from restricted securities or convertible securities.

04 August 2004

Form 42 – More time for companies who have not been issued a form to report transactions involving employment-related securities.
If we did not send a Form 42 for the year ended 5 April 2004 to companies for them to report transactions involving employment-related securities then we will not take penalty proceedings if we receive the required information by the 30 November 2004.

30 July 2004

National Statistics - Share schemes
National Statistics on Share Schemes for 2002/03 were published today.

23 June 2004

Two-month extension of deadline for submitting Form 42 in relation to transactions involving shares and other securities.
Finance Act 2003 introduced new reporting requirements that impact on owner-managed and newly incorporated companies. We have recently become aware that some people are experiencing difficulties with the new reporting procedure and have decided in the circumstances that we will not take penalty proceedings, provided Form 42 is received by 6th September 2004, in cases where we have not issued a Form 42.

Where a Form 42 has been issued, we expect it to be completed and returned within the statutory time period, i.e. by 6th July.

18 June 2004

The Government has tabled three New Clauses to the Finance Bill 2004 to block, from today, avoidance schemes using employment-related securities. The amendments ensure that the charging provisions in Part 7 of the Income Tax (Earnings & Pensions) Act 2003 continue to apply regardless of artificial arrangements that attempt to remove the employment link between the employee and securities or securities options.

The changes also prevent abuse of Inland Revenue approved share schemes where they, or shares acquired from them, are part of a scheme or arrangement to avoid tax and/or National Insurance contributions. They will also ensure that various exemptions from charge in the taxing rules, to cater for certain very limited circumstances in which employees receive value which is not by reason of their employment, are limited only to those circumstances and cannot be used to pass remuneration value free of tax and National Insurance Contributions.

Draft Clauses and Explanatory Notes can be viewed on the Treasury website.

Press Release announcing the changes is published on the GNN website.

25 May 2004

Ratchets
The Inland Revenue has today published further guidance in the form of Frequently Asked Questions on its Share Schemes pages. These concern the taxation of ‘ratchets’, often used in venture capital arrangements, the treatment of ratchets entered into before 16 April 2003, and the taxation of ‘catch-ups’.

There has been an update to the FAQ entitled

24 May 2004

The National Insurance Contributions and Statutory Payments Act 2004 received Royal Assent on the 13 May.

It contains measures to help employers with their National Insurance contributions (NICs) obligations and align aspects of the administration of NICs and Statutory Payments with those for tax. It does not make any changes to the structure or rates of NICs or disturb the principle of the contributory system.

All information relating to the above is now in the Employment Related Securities Manual.

12 May 2004

Model documents for the Share Incentive Plan

We have updated the model Deed [RTF 52K), model Rules [RTF 319K] and the checklist to include changes made in Finance Act 2003 and other minor corrections.

7 May 2004

The Government has tabled two New Clauses to the Finance Bill 2004 to block, from today, avoidance schemes using employment-related securities involving restrictions. The amendments will also ensure that provisions in Part 7 of the Income Tax (Earnings & Pensions) Act 2003, designed to provide relief in certain bona fide cases, cannot apply where the transactions are part of a scheme or arrangement to avoid tax and/or National Insurance contributions. Draft Clauses and Explanatory Notes can be viewed on the Treasury website.

A Press Release announcing the changes has been published.

26 April 2004

We have ‘tidied up’ some out of date FAQs on our Share Schemes pages. This includes correcting some of them to distinguish between long options for shares and other securities and have also revised FAQ 7(a).

23 April 2004

UNICO (the University Companies Association) and the Inland Revenue have together identified a ‘safe harbour’ which will allow university academics to become shareholders in start up companies, now knowing with certainty that tax on share gains will be payable only when they cash-in their shares. Details are set out in a Memorandum of Understanding (PDF 102K) and will also be available on UNICOs website shortly.

We have ‘tidied up’ some out of date FAQs on our Share Schemes pages. This includes correcting some of them to distinguish between long options for shares and other securities and have also revised FAQ 7(a).

29 March 2004

Share Focus - issue 3 (PDF 86K)
The third edition of Share Focus, the Share Schemes Team newsletter has now been published

23 March 2004

The Frequently Asked Questions on the Taxation of Employment Related Securities Following the Finance Bill 2003 have been updated. The following Questions and Answers have been added or amended:

Chapter 1

Chapter 2

Chapter 3

Chapter 3C

Chapter 3D

Chapter 5

General Questions

All information relating to the above is now in the Employments Related Securities Manual.

16 March 2004

We have published today a copy of the new information return (PDF 91K) for unapproved Share Schemes.

The return asks for details of all the reportable events required by section 421J Income Tax (Earnings & Pensions) Act 2003. Although the return covers all reportable events companies only have to complete the sections where transactions in employee related securities have occurred.

Where we are aware that companies have unapproved share schemes, we will be issuing a copy of the return to them on or after 6 April 2004.

Companies must complete and send the return back before 7 July 2004.

Where companies have received a return and there are no reportable events, they will still have to make a Nil return.

Companies that do not receive a return are still required to notify the Inland Revenue of any reportable events before 7 July 2003. Companies may download a copy of the unapproved return to use for this purpose.

Penalties may be imposed in relation to any failure to make a return of reportable events.

24 February 2004

We have today made available on our website copies of the information returns for the year ended 5 April 2004. The returns are for the following approved schemes: Profit Sharing, SAYE, Company Share Option Plans, Share Incentive Plans and Enterprise Management Incentives.

Top

2003

23 December 2003

Share Focus - issue 2 (PDF 123K)
The second edition of Share Focus, the Share Schemes Team newsletter has now been published

28 November 2003

The National Insurance Contributions and Statutory Payments Bill was introduced into the House of Commons on 27 November 2003. The Bill and other supporting documents were published on 27 November 2003.

13 November 2003

Special Commissioners decision - M C Bluck v H A Salton (H M Inspector of Taxes)
Payment received for cancellation of share options. Commentary on the decision is now available on our web site.

31 October 2003

Cashless exercise and market value
The Revenue has today published guidance on how to establish the market value of shares, for the purposes of Chapter 5 Part 7 ITEPA 2003, where the employee has agreed with the employer to sell some or all of the shares immediately on exercise of an option.

06 October 2003

We have made available today two new approved forms of joint election under section 431 ITEPA 2003. These are for use with EMI options and are a one part election (PDF 88K) (for individual awards) and a two part election (PDF 95K) (for awards to several employees)

03 October 2003

Finance Act 2003 - Schedule 22 Restricted Securities Calculator
The Inland Revenue have now made available a Restricted Securities Calculator to help Employers and their employees to compute taxable gains made from these types of awards. The calculator is in the form of an Excel 97 spreadsheet. To obtain an electronic copy of the calculator send an email request to Share schemes.

10 September 2003

EMI options granted at discount - effect of election
A further Q& A has been published today to demonstrate the effect of a section 431 election where the EMI option was granted at a discount and there is a charge under section 531.

05 September 2003

EMI & restricted securities elections
We have published today some further guidance on the interaction between the EMI code and the restricted securities legislation. Particular regard to this should be had by those employees who have exercised EMI options on or after 16th April 2003 for which the deadline for elections may run out after 15th September 2003.

14 August 2003

Share Schemes - Update on 'Appointed Day' & Elections
This announcement supersedes the announcement of 1 August.

We can confirm that the 'Appointed Day' is now the 1st September. It follows that the final date for elections under section 431 on restricted securities acquired during the period 16th April up to and including 31 August 2003, will now be Monday 15th September.

The Regulations for the “Appointed Day” were made on the 5 August. On the 11 August the NIC Regulations were also published so that both sets of Regulations will now come into force on the 1st September 2003.

12 August 2003

Shares in foreign parent company
A correction has been made to the answer to Q6(a) on PAYE and readily convertible assets (RCAs) to recognise that a non-UK parent company's shares may be CT-deductible and, if non-tradable, non-RCAs on which no PAYE or NIC is due from the employer.

All information relating to the above is now in the Employments Related Securities Manual.

Finance Act 2003
Schedule 22 Commencement provisions and National Insurance Regulations
The Finance Act 2003, Schedule 22, Paragraph 3(1) (Appointed Day) Order 2003 published on 5 August will give effect to changes made by Schedule 22 of Finance Act 2003 (FA 2003) to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) as from 1st September 2003, which is the day appointed in that order. Changes to the National Insurance Regulations to align NICs treatment with the tax changes will also come into effect from 1st September 2003.

8 August 2003

CGT and Employee Share Options Mansworth v Jelley -increased capital losses (PDF124K)
After the court decision we explained some of the consequences of the case on the internet. An article in Taxation challenged our view on one point and, after taking legal advice, we now accept that if a taxpayer has already claimed a capital loss for a Self Assessment tax year and that loss is increased following Mansworth v Jelley, s/he can make an additional capital loss claim within the time limit. We have amended question and answer 13 and the final section of the article "Further details on the tax treatment of options following the decision in the case of Mansworth v Jelley".

1 August 2003

Share Schemes - Update on 'Appointed Day' & Elections
We originally indicated that the 'Appointed Day' for various provisions to come into force was likely to be 1st August. The regulations for this are prepared but not yet published because we need to ensure that the related NIC regulations are published at the same time and come into force on the same day. The NICs regulations are not quite ready for publication, but are expected to be ready sometime in the week commencing 11 August. Both sets of regulations will then come into force 21 days later. It follows that the Appointed Day will not now be earlier than Monday 1st September and the final date for elections under section 431 on restricted securities acquired between 16th April and the Appointed Day will not be before Tuesday 16th September.

25 July 2003

Schedule 21 Finance Act 2003
We are publishing today some frequently asked questions on the new Schedule 21 FA 2003.

Appointed Day & Elections
Q&A 7(b) suggested that the Appointed Day for various provisions to come into force was likely to be 1st August. The regulations for this are prepared but not yet published because we need to ensure that the related NIC regulations are published at the same time and come into force on the same day. The NICs regulations are not quite ready for publication, but are expected to be ready sometime in the week commencing 28th July. Both sets of regulations will then come into force 21 days later.

It follows that the Appointed Day will not now be earlier than Monday 18th August and the final date for elections under section 431 on restricted securities acquired between 16th April and the Appointed Day will not be before Tuesday 2nd September.

Management buy-outs, earn-outs & carried interest
The legislation in Schedule 22, Finance Act 2003 is designed to deliver the policy of subjecting to tax, and national insurance contributions, value obtained as a result of acquiring securities by reason of employment. The legislation is designed to ensure that value from capital growth is not caught. However, in complex arrangements, such as those described in these memoranda, the divide between capital growth and value obtained as an employee is not easily identifiable. These memoranda have been drawn up to give some clarity in this area for the majority of straightforward cases. Where the circumstances of any particular case are different then the tax consequences will need to be considered in the light of the particular facts.

Below are links to two memoranda of understanding with the British Venture Capital Association (BVCA) and a link to an associated FAQ on "earn-outs" which was published on Tuesday 22nd July.

The BVCA has issued the following statement in relation to the two memoranda:

[MEMORANDUM OF UNDERSTANDING
Set out below are two Memoranda of Understanding agreed between the Inland Revenue and the Taxation Committee of the BVCA covering the income tax treatment of management equity in private equity transactions, the use of limited partnerships as private equity investment funds and associated matters.

If you require further advice or information about the Memoranda of Understanding you should consult your own professional advisers.

Disclaimer:
The BVCA and its employees, Council and committee members accept no responsibility of any kind for any action taken by any person as a result of these.]

All information relating to the above is now in the Employments Related Securities Manual.

22 July 2003

Schedule 22 Finance Act 2003 - Restricted Securities - Elections

Here are the final prescribed copies of the Revenue approved form of elections within Chapter 2 (restricted securities) of Schedule 22 Finance Act 2003. There are three possible elections with each one consisting of a simple one part election and also a two part election for where there are more than a few employees.

Where the particular circumstances of a case might suggest a modification to the prescribed format, please contact one of the following Employee Share Scheme Unit advisers, as indicated by the employer alphabetical allocation:

A - E Jon Prothero 020 7438 8225
F - O Bill Rafferty 020 7438 6626
P - Z George Webster 020 7438 6387

For restricted securities acquired on or after 16th April 2003 and before the “Appointed Day” the forms for section 431 elections may be modified to refer to the 14-day time limit after the “Appointed Day”, (rather than “date of acquisition” in section 3).

Interim guidance on how the Inland Revenue will treat earn-outs on the sale of a business will be found in FAQs at Q5(l)

14 July 2003

Shareschemes - Further frequently asked questions on taxation of employment-related securities
We are publishing today some further Q&A on the new Schedule 22. At the same time we have amended and updated some of the existing answers:

Updated Q&A - 1(h), 1(l), 2(d), 2(k), 2(o), 2(p), 2(t), 7(b)

New Q&A - 1(m) - 1(o), 2(u) - 2(v), Q3(d), Q3C(c) [replacing the previous Q&A], Q6(c) [replacing the previous Q&A], Q6(d) - (j), 7(a)

Management Buy-outs, Earn-outs & Carried Interest

Discussions are continuing with the British Venture Capital Association. We hope to publish detailed guidance on the tax treatment of the ex-owners, managers and VC managers in the near future.

All information relating to the above is now in the Employments Related Securities Manual.

30 June 2003

Frequently asked questions on taxation of employment related securities
Subject to Parliamentary approval and Royal Assent, Schedule 22 to Finance Bill 2003 replaces Chapters 1 to 5 of Part 7 of the Income Tax (Earnings and Pensions) Bill 2003 (ITEPA), and introduces a number of changes to the taxation of employment-related securities. This guidance gives an overview of the new legislation and provides answers to the common questions that have been asked

30 June 2003

Here are draft copies of the Revenue approved form of elections within Chapter 2 (restricted securities) of Schedule 22 of the Finance Bill 2003. There are three possible elections with each one consisting of a simple one part election and also a two part election for where there are more than a few employees.

You are welcome to comment on the form of these elections, by post to Michael Staples, Technical Advisor, Share Schemes Unit, New Wing, Somerset House, Strand, London WC2R 1LB or by e-mail to michael.staples@ir.gsi.gov.uk, by 14th July 2003. Final approved copies of the elections for use by employees and employers will be published here, or available from the above address, shortly after Royal Assent to the Finance Bill. The elections may not be valid if signed prior to the day to be appointed by Statutory Instrument for the introduction of Chapter 2.

All information relating to the above is now in the Employments Related Securities Manual.

22 May 2003

SI 2003 - 1337 The Social Security (Contributions) (Amendment No. 4) Regulations 2003 (PDF - 18K)
This Statutory Instrument, amending National Insurance Regulations, was laid on Tuesday 20 May and will come into effect on 10 June 2003. The purpose of these amendments is to relax restrictions on employers' ability to recoup primary Class 1 NICs liabilities from employees when they have been unable to withhold a liability from the earnings when paid. This relaxation applies only to share-based earnings and earnings paid through intermediaries. In these circumstances, these amended regulations allow the employer one further year to recoup the liability from subsequent payments of earnings to the employee, and remove the limit on the amount that can be recouped from any subsequent payment of earnings.

16 April 2003

'Finance Bill 2003 and accompanying Explanatory Notes published today contains full details of all measures relating to Share Schemes (Clauses 138 - 141) announced in Budget 2003. Further information can be found in the budget note Tackling Avoidance on Equity Remuneration and Creating a Fairer System.

14 April 2003

CSOP changes effective from 9 April 2003
This link takes you to the Provisional Collection of Taxes Act Resolution which brings in the CSOP changes from 9 April 2003 Budget Day. You need to scroll down to the Main Business section and then down to Resolution No 29 to view the full text of the Resolution.

09 April 2003

A package of measures to support Share Schemes, reduce the administrative burden on employers and make the tax and National Insurance treatment of equity remuneration fairer for all taxpayers was announced by the Chancellor in the Budget today. More information can be found at Budget 2003. As part of this package a Statutory Instrument (PDF 107K) was laid on Budget day, which will have effect from 10th April 2003.

07 April 2003

Annual return forms for the following schemes have today been issued to companies. Guidance notes on how to complete these will be published in the near future.

17 March 2003

Tax treatment of certain options following Mansworth v Jelley (PDF 126K) The outcome of this case has changed the way in which gains and losses are determined where assets are acquired by the exercise of options in certain circumstances. In his 2003 Budget the Chancellor of the Exchequer made proposals to reverse the effect of the outcome of this case.

11 March 2003

The Income Tax (Earnings and Pensions) Act 2003 has received Royal Assent and will become law on 6 April 2003. The legislative references on our website will be changed shortly. From 6 April formal approval for new share schemes will no longer be granted under Schedule 9 ICTA 1988 and the scheme rules will need to reflect the new legislation. The checklists for SIP, CSOP and SAYE (RTF 45K) schemes have been changed to show the new statutory references.

11 February 2003

Please note that you can no longer send correspondence through the 'Document Exchange' (DX) service to the Share Schemes team in Somerset House as this has been withdrawn. We apologise for any inconvenience caused. If you have used DX to send anything to us on or after 16 December 2002 and you have not received an acknowledgement, please send a copy marked 'URGENT - PREVIOUSLY SENT BY DX' to Share Schemes Team, Room 76, New Wing, Somerset House, Strand, London WC2R 1LB.

27 January 2003

Section 1(2) Employee Share Schemes Act 2002 (ESSA 2002) enables companies to involve their employees more closely in the operation of the Share Incentive Plan by setting up a board of trustees for the plan which may include employee representatives. In addition to the original model trust deed two new ones are now available on our website - one for larger companies and one for smaller companies.

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2002

19 December 2002

On the 27 November 2002, in the 2002 Pre Budget Report, the Chancellor announced changes to the Corporation Tax treatment of Share Schemes. Draft legislation (PDF 129K), technical commentary (PDF 43K) and a Partial Regulatory Impact Assessment (PDF 26K) have been published today.

27 November 2002

On the 27 November 2002, in the 2002 Pre Budget Report, the Chancellor announced changes to the Corporation Tax treatment of Share Schemes. See Press Notice REV/C&E1 for more details. Draft clauses will be published in due course.

8 November 2002

The Share Schemes Bill 2002 received Royal Assent on 7 November 2002. You can view a copy of the Act which is published on Her Majesty's Stationery Office website. It comes into effect on 6 April 2003. See News Release 68/02 and our detailed explanation.

30 October 2002

A revised Model Trust Deed document is now available.

21 August 2002

Tax Bulletin 60
The latest Tax Bulletin was published in August. It provides an update on the material in Tax Bulletins 46, 55 & 56, in particular on Tax and NICs on internationally mobile employees. It provides answers to various questions we have received. Also,

  • Question 13 - A change of view on whether S162 ICTA 1988 can apply where an option is exercised by a Case II/III employee after leaving employment - it can't.
  • Question 14 - A change of view on whether exemption under S140C(3) ICTA 1988 can be obtained through a foreign company's articles of association - it can.

Share Schemes Manual

Further amendments have been made to the Share Schemes Manual (SSM). They are:

  • SSM4.12 - Shares risk of forfeiture
  • SSM8.6 - Indexation allowance and taper relief - text amended and inserted
  • SSM11.5 - Share Options - case II or III - text deleted and new text inserted.

20 August 2002

NIC Model Joint Election forms Part 1 & Part 2 are now available to download and print off.

06 August 2002

New Bonus Rates for SAYE Savings Contracts
The Treasury today announced changes in the bonus rates for the Save As You Earn (SAYE) with effect from 1 September 2002.

02 August 2002

Share Scheme Trusts
Tax Bulletin 59 provides a reminder to trustees of their obligation to file a trust return.

22 July 2002

Share Scheme Manual amendment
SSM4.12 Correction to instruction on S140C(4) ICTA 1988 - "redeemable shares" replaced by "redeemable securities"
SSM4.14 Correction to instruction on S140D(9) ICTA 1988 - "new class of shares" replaced by "original class of shares"

22 July 2002

The draft Income Tax (Earnings and Pensions) Bill published
Published by Tax Law rewrite on 1 July 2002, this draft bill has 712 clauses and 8 schedules. 145 clauses and 4 schedules relate to share schemes. Consultation on the draft is invited by 27 September 2002. You may access the bill from the Tax Law Rewrite web site

2 July 2002


Share Focus - Issue 1 (PDF 77K)
The first edition of Share Focus, the new Share Schemes Team newsletter has now been published. It's aim is to provide information on new interpretations on technical issues on share schemes, give guidance on practical issues to advisors, companies and scheme administrators, and to give information about the work of the Share Schemes Team.

21 June 2002

Share Scheme Manuals
Links to two share scheme manuals have been added to our web pages. The Share Schemes Manual (SSM) provides more detailed information on the taxation of share or share-related benefits. The Share Schemes Unit Manual (ESSUM) gives detailed guidance to Revenue staff on their operational responsibility for the approval and oversight of Share Schemes.

6 June 2002

Key Words/Phrases Index
A new index of key words and phrases to make it easier to find information has been added to our website.

18 March 2002

Share Schemes
The Share Schemes area of our web site has been reorganised and updated to provide easier access to the range of information and guidance on share schemes

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2001

30 January 2001

Allowing Employees to Bear the Employer's National Insurance Arising on Share Option Gains.
We have now provided model joint NICs elections for employers and practitioners who are considering submitting an election for Inland Revenue approval.

27 November 2001

Pre-Budget Report - Press Release REV/C&E1
The Chancellor announced in his Pre-Budget Report that the EMI gross asset limit is to be doubled to £30m for options granted from 1 January 2002.

26 November 2001

Booklet IR2006 - Enterprise Management Incentives - A Guide is now available on our website. The booklet aims to take you through the qualifying requirements for Enterprise Management Incentives (EMIs) and is suitable for employers, employees and advisors.

29 October 2001

Following the Chancellor's announcement today at the press launch of the nationwide roadshow to publicise the Share Incentive Plan (SIP) (PDF 430K), formerly known as the All Employee Share Ownership Plan (AESOP), all references on this website to AESOP have now been changed to SIP.

22 October 2001

New guidance for employers and advisors on the Share Incentive Plan (SIP) will be appearing on our website on the 29th October. The new guidance will include sections on Designing a Plan, Getting a Plan Approved, Operating a Plan, the Tax Implications and Further Help.

15 October 2001

The Inland Revenue and Proshare have organised a Roadshow for the first anniversary of the new Share Incentive Plan. It is aimed at companies with up to 250 employees and will cover what the plan is, why it was introduced, how it can be customised, how to get approval and take-up. The first Roadshow will take place in Peterborough on 31 October 2001 and will visit twelve other locations around the UK by the end of the November. The Employee Share Alliance will also be represented at the Roadshow.

12 October 2001

The Social Security Contributions (Share Options) Act 2001

We have now produced guidance on the special provisions for roll-overs.

12 October 2001

Tax Bulletin
The October issue of Tax Bulletin, which contains an article on how the taxation of share options affects internationally mobile employees, is now available.

27 June 2001

Enterprise Management Incentives (EMI)
New Information and Guidance on EMI is now on the web site.

11 June 2001

New Q and A's on the taking part in the SIP when you are working outside the UK.

18 May 2001

Update to the Social Security Contributions (Share Options) Act 2001

15 May 2001

Finance Act 2001

The Finance Bill 2001 received Royal Assent on 11 May. Changes to the SIP and EMI in the Bill have come into effect. Amendments were made to the Finance Bill to allow employees who have salaries that are not within the scope of UK taxation under Schedule E, for example, non-UK resident employees, to participate in partnership and matching shares. Click here for details of changes to the SIP.

15 May 2001

Click here for details of changes to the EMI

13 May 2001

Update to the Social Security Contributions (Share Options) Bill.

11 May 2001

A new Inland Revenue booklet, IR 2002, The Share Incentive Plan - A guide for employees, has now been published. The leaflet explains the Share Incentive Plan (SIP) and the tax and National Insurance rules. It is available from SA Orderline by telephoning 0845 9000 404.

11 April 2001

Update to the Social Security Contributions (Share Options) Bill

30 March 2001

The Finance Bill has been published today. Clauses 61 and 93 affect SIP and Clause 62 affects EMI.

The Finance Bill news release covers details of three minor changes to the SIP, in addition to changes announced on Budget Day (REV3).

30 March 2001

Q&A on the EMI changes announced in the Budget and when they take effect

7 March 2001

Budget Announcement on Enterprise Management Incentives and Share Incentive Plan.

21 February 2001

New check lists for CSOP and SAYE now available

08 November 2000

PBR announcement on National Insurance on share options granted between 6 April 1999 and 19 May 2000

08 November 2000

PBR announcement on Enterprise Management Incentives.

Comments on the proposed changes are welcome and should be sent by 13 December to:

Richard Lambert
Inland Revenue
Capital and Savings
Room 138
New Wing
Somerset House
Strand
London WC2R 1LB

Richard.V.Lambert@ir.gsi.gov.uk

09 October 2000

Questions and answers on Stamp Duty and the Share Incentive Plan.

09 October 2000

A new Q&A on Enterprise Management Incentives (EMI) and disqualifying events.

09 October 2000

Regulations have been laid to ensure that Employee Share Ownership Plans are not defined as Unit Trust Schemes.