Growth shares, employees, directors and ITEPA S431

A summary of the steps employers and recipients should take when awarding growth shares

When awarding growth shares to employees or Directors there are two actions that need to be taken:

  1. For growth share recipients: To avoid any future income tax charges under the 'restricted securities legislation', employees and directors must complete an ITEPA S431 election within 14 days of accepting their growth shares. Download the form here.
    • Certain web browsers (e.g. Chrome) don't open the HMRC form. You can either try a different browser or right-click the link, click ‘Copy Link Address’ and paste the address in a new tab. 
  2. For companies distributing growth shares: You don't need to complete an initial notification for employee growth shares when first granted, but you do need to submit an annual notification before 6th July to declare that an election has been made in the previous financial year. This is called an Annual other ERS notification. You can find help for your submission in your Vestd account at Compliance > Annual notifications
    • This is a similar process to the EMI initial notification, in that you first need to notify them of the existence of the scheme, then return after about 5 working days to notify the details. So it's important to leave plenty of time.

It's not uncommon for companies to complete the S431 form before passing it onto the recipient to sign. Either way, both parties must sign the document and the employer needs to maintain a copy. 

The employer doesn't need to submit the document to HMRC within the 14-day window, but they will need it when submitting their annual notification to declare that an election has been made. 

In most circumstances, all restrictions will be disapplied in Section 4 of the form. 

 

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