Where securities (or interests in them) are acquired or held by or for employees or directors, they are often subject to restrictions which may reduce their value. These restrictions can be important to the design of employee incentives and remuneration. Restrictions of this type are also important because they bring many employees within complex income tax provisions for the taxation of restricted securities. These income tax provisions are explained in this practice note.
Finance Bill 2014 includes significant changes to tax-advantaged and fully taxable share schemes, including amending Chapter 2 and Chapter 3C of Part 7 of ITEPA 2003 to allow for tax-free rollover of restricted securities and securities acquired for less than market value. It will also extend Chapter 2 to apply to restricted securities acquired by non-residents. For more information, see Practice note, Employee share schemes and Finance Bill 2014: summary of changes.