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The new information return for share schemes

Under the Finance Act 2003, companies are now required to notify the Inland Revenue when transactions in employment-related securities have occurred. Companies should do so by completing the Form 42 by 6th July in the tax year following the year in which the reportable transaction took place.

For the current tax year, the Government has extended the deadline line for submitting Form 42 to 6th September 2004 (but only in cases where the Form 42 has not already been issued. Therefore if you have already received a Form 42, you will still need to submit it to the Inland Revenue by 6th July 2004).

Employment-related securities
‘Employment-related securities’ are securities that are acquired or are deemed to have been acquired because of employment, where the opportunity to acquire them is made available to the employees by an employer or a person connected to an employer.

The definition of securities is wide but generally includes shares in a company, debentures, debenture stock, loan stock, bonds, other instruments creating or acknowledging indebtedness, warrants and other instruments entitling their holders to subscribe for securities, such as options.

Penalty for failing to report
Penalties of £300 per reportable event and up to £60 per post deadline are technically possible.

Officially the company secretary should sign Form 42 but it is understood that the acting agent may do so (this has been agreed informally, and so may change).

If you would like to discuss this new legislation in any more detail, please contact Darren Specterman, Tax Partner at Glazers, on 020 8458 7427 or email him: darren.specterman@glazers.co.uk.

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