Tax election

For use when a director or employee is issued shares, including founder shares acquired on incorporation of a start-up.

About this document:

  • This is an irrevocable one-part joint election intended to be entered into between a director or employee and his company when he is issued shares by his company, including founder shares acquired on incorporation of a start-up.
  • The election is made under Chapter 2 of the Income Tax (Earnings and Pensions) Act 2003, which deals with the taxation of employment-related securities and imposes income tax on any untaxed value of restricted securities when the restrictions are lifted or the securities are sold.
  • Shares in private companies are often restricted securities because the company’s articles of association will typically include restrictions on the transfer of shares, such as pre-emption provisions, and/or compulsory transfer provisions in the event that the employee or director leaves the company.
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