Tax and Reporting Implications of Employment Related Securities (ERS)

Introduction to Share Awards

• Employment-related securities definition
• 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

• Normal tax rule exceptions
• Arising tax charges 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

ERS 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)

Training is delivered by a consultancy Director whose company specialises in taxation, share scheme advice, reward and lecturing. This expert has developed a specialised share scheme service for small businesses and advises FTSE companies on communication. Lecturing covers most aspects of Direct Taxation, and he has a particular interest in employment taxation and transfer pricing - posing unusual, conceptual challenges.

Working for Henderson for nearly 9 years prior, he led the Share Schemes team for part of this time. He completed the level 7 CIPD Master's qualification during his time here.

This expert has been with Australia Mutual Provident (AMP), helping establish one of the first Share Incentive Plans (SIP) for large companies in 2001. Such unusual circumstances sparked a call from the Revenue to discover how they could encourage more large companies to adopt SIP.

He began his career in taxation and, for the following 16 years, worked in three of the “Big Four” accountancy firms. He ultimately worked as a Senior Manager with Deloitte & Touche, bringing experience including profit-related pay, share schemes, expatriate tax, tax investigations, reward management, US taxation, transfer pricing and corporate tax.

• Training at Redcliffe provides a clear understanding of the specific guidance, including rule exceptions
• Participants identify when income tax and national insurance charges arise in connection with employment-related securities
• Understand which elections can be made to vary the normal tax treatment and when they may be beneficial or disadvantageous
• Determine 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
• Participants review 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 issuing them

Redcliffe’s course is a ‘nice to know’ for:

• Non-tax professionals looking to understand tax implications for individuals and companies who are party to ERSs.

Training helps participants to 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 learn how calculations work and the information required for reporting annually to HMRC regarding share schemes in the annual employment-related securities return.