Tax and Reporting Implications of Employment Related Securities (ERS)

Introduction to Share Awards

• Share awards – the view from 10,000 feet.
• The mischief and the solution
• A voyage around Part 7 ITEPA
• A comparison of different tax advantaged share schemes

What is an Employment Related security?

• What is a security?
• … and what is not a security?
• Securities options.

Is a Security Employment related?

• Available by reason of employment
• Made available by the person’s employer
  • HMRC v Vermilion Holdings Limited [2023] UKSC 37
• Exception for family and personal relationships
• Founder shareholders

Basic principles

• Income tax
• National insurance
• Capital gains tax on share issued to employee’s awards

 Restricted securities

• Restrictions: what and when?
• Tax treatment of acquisition
  • Special rules: forfeiture
  • Elections
• Tax treatment on chargeable event
  • Removal
  • Variation
  • Disposal
  • The taxable amount
  • DB Group Services (UK) and UBS AG v HMRC [2014] EWCA Civ 452
  • UBS AG and DB Group Services (UK) [2012] UKUT 320 (TCC).
  • Exclusion from charge on chargeable event

Elections that can vary the normal tax rules

• The section 431 election
  • Advantages
  • Disadvantages

Convertible securities

• What is a convertible security?
• Difference between convertible securities and restricted securities
• Flowering shares and growth shares

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 in relation to employment related securities

 Notional loans

• When do they arise?
• What is the taxable amount?
• Discharge of loan

Unapproved share options

• Tax charge on exercise

Approved share schemes (Sharesave, CSOPs, EMI, SIPs)

• Conditions
• Tax charges

Internationally mobile employees

• Importance of residence for tax charges

Calculation of chargeable UK income from employment share schemes reporting

Using share awards in the current environment – trading salary for shares

Annual Employment Related Securities reporting of share schemes

There will be examples throughout to illustrate the various points.

Our trainer advises on all areas of revenue law, both corporate and personal, but has a particular interest in corporate tax matters including, acquisitions and disposals, reconstructions and demergers, MBOs, returning capital to shareholders, s425 schemes, SDLT, stamp duty and SDRT.

He has a special expertise in the taxation of insolvent companies, members' voluntary liquidations (including s110 schemes) and bankruptcy, and lectures regularly to R3 and is a member of the R3/HMRC liaison group which meet regularly to discuss issues of conflict between insolvency law and tax law.  Over the years he has been involved in advising on the tax aspects of some of the UK's major insolvencies including Maxwell, Pollypeck, BCCI, Olympia and York, Mayflower, ITVdigital, MFI, Allied Carpets, Borders, Farepak and Lehman Bros.  He is a Fellow of the Association of Business Recovery Professionals (FABRP) having passed the JIEB examinations.

 Following his call to the bar by Middle Temple in 1986 and pupillage in insolvency chambers (3/4 South Square) where he was pupil to the late Gabriel Moss QC and tax chambers (Pump Court) he joined Paisner & Co (now Bryan Cave Leighton Paisner) before moving on to Allen & Overy.  In 1993 he joined Coopers & Lybrand (now PwC) and then in 1996 Deloitte, where he was made a corporate tax partner in 1999.

In 2008, fearing he would be found dead in his hutch under a pile of budgets, appraisals and forecasts he returned to the Bar and joined Temple Tax Chambers

• Gain a clear understanding of the employment-related securities legislation, HMRC guidance, including the exceptions that apply 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 the conditions that must be met for a scheme to be ‘tax-advantaged’, including Sharesave schemes tax, Company Share Option Plans, Enterprise Management Incentive options and Share Incentive Plans.
• Identify what aspects of each scheme the company operates have to be reported in the ERS annual return share schemes.

• Our employment related securities training course is highly practical and will include multiple examples to assist with understanding the rules.
• It is presented by a barrister and is a completely independent look at the issues raised.
• Please note that this employment related securities course will encourage participation and allow for all questions and clarifications to be considered.
• We consistently ensure that our employment related securities training is completely current and relevant.

• This employment related securities course is a ‘must know’ for professionals who deal with the tax compliance of individuals in receipt of ERSs and/or the companies who issue them.  
• This employment related securities course is also a ‘nice to know’ for non-tax professionals to understand the tax implications for individuals and companies who are party to ERSs.

• Our employment related securities webinar is designed to help attendees understand the employee share scheme tax implications of employee share schemes and option ERS schemes.
• It will discuss the various income tax and potential national insurance liabilities arising from non-tax-advantaged schemes and the conditions that need to be met for a scheme to be tax-advantaged.
• Delegates will learn through multiple examples how the calculations work and what information must be reported to HMRC each year in respect of share schemes in the annual employment related securities return.