Do you have to file a section 431 election?

Do you have to file a section 431 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 does a section 431 election do?

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 is a joint election form?

a two-part NICs joint election, which allows the employer to sign only one document to apply to all employees entering into the election, instead of one document for each employee. In the case of the two-part, an election will not be valid until both parts A and B are signed and dated.

What is joint election under s431 Itepa 2003?

A s431 election is a joint election made by an employee and the company to ignore the restrictions applying to shares when they are issued to an employee.

What is the difference between actual market value and unrestricted market value?

Unrestricted Market Value (UMV): This values all the shares as if they had no restrictions and could easily be bought and sold at the prevailing worth of the company at the time. Actual Market Value (AMV): This will not be higher than the UMV, but may be significantly lower.

Who makes a s431 election?

Provided the director/ employee pays the full UMV for their shares as at the time of their acquisition and makes an election within 14 days to say they have done so (the s431 election), they will not be required to pay an income tax charge on the future growth in the value of the shares when they are eventually sold.

How do you calculate actual market value?

The market value of a company’s equity is the total value given by the investment community to a business. To calculate this market value, multiply the current market price of a company’s stock by the total number of shares outstanding.

How do you calculate the value of stock options?

The future value of your employee stock options will depend on two factors: the performance of the underlying stock and the strike price of your options. For example, if the stock is worth $30 and your option’s strike price is $25, your options will be worth $5 per share.

How do I submit an ERS return?

To submit a nil return you need to log into the PAYE section of HMRC’s website and select Employment Related Securities. Once in the ERS system select the scheme you’re interested in filing for from the list of schemes and arrangements. You should then see the option to submit an annual return.

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