Stock Option Plan / Grant / United Kingdom

Following the end of each tax year (5th April), and by 6th July, a return must be filed with HMRC in respect of share plans operated in respect of UK Participants during that tax year. Failure to file a return may result in a penalty. 

There is an uncapped employer social security liability in connection with Awards. 

On the acquisition of shares from Awards, it is recommended that the Company and Participant consider entering into a joint election (known as a 'section 431 election') within 14 days of the acquisition of shares to ensure there is no risk of an income tax liability arising in connection with the shares in the future when the shares cease being subject to restrictions (such as on a future sale of shares). 

It is recommended that the following is included in the Award documents:

1. wording to state that the Award is separate from and does not form part of the Participant’s employment benefits to exclude any liability on the part of the Company or Local Company for the loss of an Award as a result of the Participant’s termination of employment;
2. a full indemnity in respect of income tax and National Insurance contributions. If payment of the employer’s National Insurance contributions is to be made by the Participant, this should also be stated in the Award documentation;
3. language to confirm that the Local Company is operating the Plan in accordance with the applicable data privacy notice; and
4. where deductions are to be made to Participants' salaries in connection with the Plan, that Participants agree to such deductions being made.