Tax and Reporting Implications of Employment Related Securities (ERS)

Introduction to Share Awards

• The meaning of employment-related securities
• Phantom share awards
• Scope of legislation (ITEPA)
• Exception – family transactions

Basic Principles

• Income tax
• National insurance
• Capital gains tax on shares issued to employees’ awards

Restricted Securities

• Exceptions to normal tax rules
• Tax charges that arise when restrictions are removed
• Elections that can vary from the normal tax rules

Convertible Securities

• Normal tax rules
• Exception
• Calculations

Shares Artificially Suppressed in Value

• Charge on acquisition

Shares Artificially Enhanced in Value

• De minimis exception
• Charging rules

Shares Acquired at Less Than Market Value (If Not Caught by Items Above)

• Amounts treated as employment income

Securities Disposed of for More Than Market Value

Post-Acquisition Benefits Received Concerning Employment-Related Securities

Notional Loans

• When they arise
• Taxable amount
• Example
• Discharge of loan

Unapproved Share Options

• Tax charge on exercise

Approved Share Schemes (Sharesave, CSOPs, EMI, SIPs)

• Conditions
• Tax charges

Internationally Mobile Employees

• The importance of residence for tax charges
• Calculation of chargeable UK income from employment share schemes reporting
• Recent case law decisions

Using Share Awards in the Current Environment – Trading Salary for Shares

Annual Employment Related Securities Reporting of Share Schemes

Employment Related Securities Course Case Studies

• Calculations with restricted securities
• Effect of the S431 election
• Effect of the S430 election
• Calculations with convertible securities
• When notional loans arise and the consequent tax charges
• Notional loans when the shares are disposed of
• Share options for internationally mobile employees (foreign service income and taxable share income)

Employment-related securities sessions are delivered by a Director of a consultancy company specialising in taxation, share scheme advice, reward and lecturing. The trainer has developed a specialised share scheme service for small companies and advises FTSE companies on communication. Lecturing covers most aspects of Direct Taxation, but his particular interests include employment taxation and transfer pricing, which pose unusual conceptual challenges.

Before this, he worked for Henderson for nearly 9 years, leading the Share Schemes team for part of this time.

The trainer took the level 7 CIPD Master's qualification whilst at Henderson. Before this, he was with Australia Mutual Provident (AMP) and helped establish one of the first Share Incentive Plans (SIP) for large companies in 2001. It was so unusual at the time that the Revenue phoned him up to find out how they could encourage more large companies to adopt SIP.

This expert began his career in taxation and, for the following 16 years, worked in three of the “Big Four” accountancy firms. He ended up as a Senior Manager with Deloitte & Touche, having worked on issues such as profit-related pay, share schemes, expatriate tax, tax investigations, reward management, US taxation, transfer pricing and corporate tax.

• Tax and reporting implications of employment-related securities provide a clear understanding of the specific guidance, including exceptions applicable to the rules.
• Identify when income tax and national insurance charges arise in connection with employment-related securities.
• Identify what elections can be made to vary the normal tax treatment, and in what circumstances this is beneficial or disadvantageous.
• Understand conditions that must be met for a scheme to be ‘tax-advantaged’, including Sharesave schemes, Company Share Option Plans, Enterprise Management Incentive options and Share Incentive Plans.
• Sessions allow you to identify aspects of each scheme the company operates that are to be reported in the ERS annual return share schemes.

Tax and reporting implications of employment-related securities training is a ‘must know’ for professionals dealing with the tax compliance of individuals in receipt of ERSs and/or the companies that issue them.

The course is a ‘nice to know’ for non-tax professionals to understand the tax implications for individuals and companies who are party to ERSs.

Sessions at Redcliffe Training will help you master the tax implications of employee share schemes and option ERS schemes. Participants discuss the various income tax and potential national insurance liabilities arising from non-tax-advantaged schemes and the conditions required for a scheme to be tax-advantaged.

Through several extensive examples, delegates will learn how the calculations work and what information must be reported to HMRC each year regarding share schemes in the annual employment-related securities return.