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Stock Option Plan / Grant / United Kingdom

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ERS Annual Return in July

( Mandatory, material action )

Local Company

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. 

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. 


Cost: EUR 2200 - For assisting with preparing an ERS Annual Return (per Award type). This is an annual obligation.

Other Issues - Tax Alert

( Mandatory, material action )

Local Company

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

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


Section 431 Election

( Recommended action )

Employee

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). 

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). 


Award Documents and Communication

Award Document Wording

( Recommended action )

Company

It is recommended to have a local version of the Award documents which includes wording to deal with local tax and legal issues.

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.

Cost: EUR 2000 - Per Award type.
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