Restricted securities | Updated guidance on section 431 elections

Published on 26th Sep 2022

Under the restricted securities regime, an employee and employer can elect to accelerate the taxation of a restricted share (using what is known as a "section 431" election)

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HMRC updated its guidance on section 431 elections on 19 July 2022, to confirm that:

  • Section 431 elections can be entered into using formats other than HMRC's standard form (so long as it can be shown that the employee and employer have agreed the key terms in no less detail than HMRC's standard form).
  • Elections can be incorporated into other documentation (such as a subscription agreement) and can be agreed via email.
  • The omission of a National Insurance number will not affect the validity of an election if one is unavailable at the time.
  • The same election may cover more than one type of security issued by more than one company at the same time, although it should only cover securities issued by the same group of companies.
  • HMRC may request evidence that section 431 elections have been made, so companies should store their section 431 election documentation in a form which can be verified.

This reflects recent HMRC practice in this area, and the update is a helpful clarification for companies and advisers.  In practice, the majority of companies will continue to use HMRC's standard form election, but the other clarifications are helpful and practical.    

Please get in touch with your usual Osborne Clarke contact or one of the experts below if you have any queries or would like to discuss further.


* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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