Elections and restrictions

KEN MOODY reviews the rules on elections to ignore restrictions on employee shares.

IN THE WAKE of the partial regulatory impact assessment (RIA) on the Form 42 adverse comment from the Chartered Institute of Taxation has been reported in the media on the costs of compliance with the reporting requirements in relation to employment-related securities (ERSs). An additional burden on both employers and employees — over and above the reporting requirements — is the need to consider various elections in relation to ERSs which if overlooked or not handled properly could result in unexpected tax liabilities.
It has long been established that if an employee acquires shares in his employer for less than they are worth the difference is taxable as a profit from the employment (see Weight v Salmon 19 TC 174). An obvious temptation therefore would be to make the acquisition conditional...