What are employment-related securities, and how does HMRC tax them?

What are employment-related securities, and why do they matter?

Employment-related securities are securities, or an interest in securities, acquired where the right or opportunity to acquire them is available by reason of an employment of that person or of anyone else [1]. "Securities" covers ordinary shares and other share classes. Options and convertibles are dealt with in their own chapters. "Employment" includes a former or prospective employment, and the rules treat directors and other office holders as employees [1][2].

Most of the confusion comes from treating three separate questions as one.

The answer to the first question can be yes while the answer to the second is no. A founder who pays full market value for unrestricted shares is within the rules and owes nothing on acquisition. The shares are still ERS, so the reporting question stays open and so does the possibility that a later event brings a charge.

The reason it matters is the rate gap. Value that arrives as employment income is taxed at up to 45% (Scottish rates differ), with National Insurance in some cases. Value that arrives as a capital gain is taxed at 24% for higher rate taxpayers, or 18% where Business Asset Disposal Relief is available. A founder who values the shares correctly, signs the right election and files on time can usually keep later growth in the capital gains regime. A founder who does none of that can find that part of what looked like a capital gain at exit is employment income, and the company has a reporting failure on file.

Are founder shares employment-related securities?

Usually yes, once the company exists and someone is giving them the opportunity to take shares.

Section 421B(3) provides that a right or opportunity made available by a person's employer, or by someone connected with the employer, is regarded as available by reason of employment [1]. The only exception that matters in practice is for opportunities made available in the normal course of domestic, family or personal relationships. HMRC treats that as a question of fact and it is hard to prove for anything other than close family [2]. The Supreme Court confirmed in HMRC v Vermilion Holdings Ltd [2023] UKSC 37, a case about options, that where the deeming rule applies there is no need to show that employment was the actual reason [2]. HMRC's manual now says so.

Three consequences follow for a startup.

First, no contract and no payroll does not take the shares outside the rules. A director, or a person who is expected to work in the business, is within them. A co-founder joining a company that already has a sole director and shareholder is the standard case.

Second, the earliest shares are a grey area in theory because the company does not exist yet to make them available. HMRC's manual does not rely on that argument. It treats initial subscriber shares as ERS and then excuses the report where conditions are met, including that the shares are acquired at nominal value and that nothing other than shares is acquired [3]. HMRC says plainly that a report not being required does not stop the shares being ERS [3]. I plan on that basis, because the later chapters of Part 7 can still apply to those shares. There is a separate exemption for further allotments. HMRC's manual also excuses the report where further shares are allotted after incorporation but before the company starts trading or receives assets, provided they go to a director or prospective director (or to someone who took initial subscriber shares by transfer), are acquired at nominal value and are not acquired in connection with another employment [3]. A founder allotment made after trading has started, or at more than nominal value, falls outside both exemptions, and the normal registration and annual return rules need to be tested against it.

Third, paying full market value does not take shares out of the definition. It usually takes the acquisition out of a charge. Practitioner guidance is consistent that an employee or director acquiring shares at market value still has a reportable acquisition.

How does Part 7 tax shares?

Part 7 has several charging regimes. Which one applies depends on what happened to the shares.

Two further points sit outside the table.

Whether PAYE applies depends on whether the shares are readily convertible assets (RCAs). That test matters only where the acquisition gives rise to taxable employment income, and holding an RCA does not of itself create an income tax or National Insurance liability. Under ITEPA 2003 s 702 that means an asset that can be sold on a recognised market, or one for which trading arrangements exist or are likely to exist under arrangements or an understanding in place when the asset is provided. HMRC's guidance is that the test is applied on the facts when the asset is provided and does not change because a market appears later [9]. For shares in a private early-stage company the answer is usually no. Where an acquisition gives rise to taxable employment income, PAYE will generally be required if the shares are RCAs. The National Insurance position must be considered separately, including whether the relevant amount constitutes earnings for NIC purposes. Where the shares are not RCAs, an income tax liability may instead fall to be reported through self assessment. That position needs checking where a sale is already under discussion. Shares that are not corporation tax deductible are treated as readily convertible assets regardless, so the corporation tax position of the issuing company matters too [9].

The company can in some cases claim a corporation tax deduction for shares acquired by employees under CTA 2009 Part 12. That is a separate relief and I do not cover it here.

What does HMRC mean by market value?

Market value for Part 7 is the capital gains definition. ITEPA 2003 s 421(1) imports it from TCGA 1992, and HMRC's valuation manual confirms that every chapter of Part 7 uses it [4].

The test is the price the shares might reasonably be expected to fetch on a sale in the open market (TCGA 1992 s 272(1)). For unquoted shares s 273(3) adds an information standard. The hypothetical buyer is assumed to have all the information a prudent buyer would reasonably require if buying from a willing seller at arm's length [4].

That standard shapes most of the practical advice.

• The holding actually acquired is what is valued. The size of the stake and the rights attached to the shares matter. It is not a pro rata share of whatever the company would be worth.
• The date is the acquisition date. For a share issue that is generally the allotment, subject to checking the facts.
• The buyer knows what a prudent buyer would ask. A prudent buyer asks about live financing, existing instruments, the state of the intellectual property and who has committed to work in the business. Facts do not disappear because a document has not been signed.
• Restrictions are treated in two ways. Actual market value (AMV) takes the restrictions into account. Unrestricted market value (UMV) ignores them. Where shares are restricted, UMV is the higher figure, and both are usually needed.

For a pre-revenue company with no customers and no assigned IP, a net assets approach is often where the analysis starts. It only holds if the file deals with every price signal on the record. I would not take a net assets figure to HMRC if the company has a convertible instrument, term sheet or recent issue that points higher and the file does not say why it does not bear on the value of the holding.

What are restricted securities, and what does a s 431 election do?

Employment-related securities are restricted if there is any contract, agreement, arrangement or condition that makes provision of a kind described in s 423 and the market value is lower than it would be without that provision [7]. The categories are forfeiture or reversion in certain circumstances, limits on the freedom to dispose of or keep the shares, and a disadvantage that follows from disposing of or keeping them.

Reverse vesting is the standard example for founders. A leaver provision that compels a transfer for less than market value on departure is another. The statutory wording is wide. HMRC's manual says a restriction can sit in a side agreement, in an employment contract or as a condition of the share acquisition [7]. An agreed but undocumented arrangement between founders may also need to be considered when determining whether shares are restricted securities. The position depends on the substance of the arrangement, whether it creates an operative restriction and its effect on market value. That matters because founders often agree vesting in a conversation and sign the documents weeks later.

Restricted securities can carry a charge at two points. On acquisition, an employment income charge under s 62 can arise, generally on actual market value less the price paid. Section 425 exempts that initial charge for certain forfeitable securities, subject to its conditions [7]. A later charge can then arise under ss 426 to 428 when a chargeable event occurs, such as the restriction being lifted or varied or the shares being sold while still restricted, and it is employment income on the value released [7]. The absence of an initial charge is therefore not a general feature of restricted securities. For a successful company the later charge can mean the whole growth in value is taxed as income rather than gain.

A joint election under s 431(1) changes that. The employer and the employee sign it, and it disapplies the restricted securities charging provisions in ss 425 to 430 by treating the shares as if they were not restricted [8]. A section 431(1) election generally brings any relevant employment income charge on acquisition into account by reference to unrestricted market value, rather than actual market value. It then prevents subsequent charges under the restricted securities provisions in respect of those shares. Subsequent growth will ordinarily fall within the capital gains regime, subject to any other applicable employment-related securities or anti-avoidance provisions. The election does not itself create a charge where no charging provision otherwise applies. If the price paid equals UMV, any charge on acquisition is nil. Section 431(2) allows an election that ignores only some of the restrictions.

The conditions are strict.

• It must be made no later than 14 days after the acquisition. It can be signed before the acquisition. HMRC will not normally extend the time limit.
• It is irrevocable. If the shares fall in value there is no relief for tax paid on the higher figure.
• It is not sent to HMRC. The company keeps it, and the annual return records that an election was made.
• It is made by the employer and the employee. Where the issuing company is not the employer, for example in a group, the employer is the party that signs.
• Shares acquired under tax-advantaged schemes get a deemed election under s 431A, which is why EMI shares usually do not need one in the normal case [8].

An election is only as good as the UMV that supports it. If HMRC later shows the UMV was higher, the shortfall can be taxed. That is why the election and the valuation are one piece of work.

Why does valuation timing cause most of the trouble?

The tax on a share issue is a function of the value at one moment. The same company can have a very different value a day later after a term sheet is signed, an IP assignment is executed or a vesting schedule is documented.

Three things make timing harder than it looks.

The information standard cuts both ways. The buyer is deemed to know the positive facts and the negative ones. A valuation that treats the problems as known and the opportunities as unknown, because nothing has been signed, does not meet the s 273 standard. Signature is not what puts information in the hypothetical buyer's hands.

The numbers are sensitive to the evidence. Take a 25% holding in a company where the available evidence points to three very different figures. The table assumes a 30% combined discount for lack of control and marketability and a 45% tax rate. The discount is an assumption for illustration and not a view on the right figure. It must be justified on the facts in any real case.

The spread between the first and last lines is the exposure on a fee that is a small fraction of it. It is also why the file has to engage with every signal and give reasons, not choose the lowest.

A valuation goes stale. There is no statutory shelf life for a non-EMI valuation. An agreed EMI valuation is typically valid for 90 days if nothing changes in the company's circumstances. HMRC's own guidance for employee shareholder valuations lists a completed or actively contemplated arm's length transaction in the company's shares as one of the events that ends an agreed valuation [14]. I apply the same instinct to founder share issues. A valuation prepared before a term sheet is signed should not be used for a share issue after it.

Sequencing sits on top of this. The order of the share issue relative to the founders' agreement, vesting terms, service agreements, IP assignment and investment documents changes what the valuation says. An issue made before those documents are signed is valued on the facts as they stand, and that can be entirely proper where it reflects the real order of events. It is not proper to delay or split documents to engineer a lower figure. The anti-avoidance chapters of Part 7 can apply where value is artificially depressed, and HMRC can ask why the steps were taken in that order. Adding or varying a restriction after the issue can also create a chargeable event or a new analysis, so the terms should be settled before the shares are allotted.

The value is fixed at the date of acquisition, and the hypothetical buyer knows what a prudent buyer would ask. The question to answer on that date is what is true, and not what has been signed.

Where do founders most often go wrong?

The same problems recur across founder share issues at pre-seed and seed, in companies with very different products. Seven stand out.

1. Treating nominal value as market value. Nominal value is a company law figure, broadly the lowest price at which a share can be issued. It says nothing about what the shares would fetch on a sale in the open market, and a price agreed between the founders is not an arm's length price. The value may well be low on that date, but it has to be shown by a valuation as at the issue date. Where the price paid is below market value the shortfall is taxable.

2. Assuming no contract or payroll means no ERS. The rules extend to directors and to people expected to work in the business, whether or not a contract exists. Nothing on the payroll does not mean nothing on the file.

3. Leaving out price signals because they are unsigned or conditional. Convertible instruments with a valuation cap, accelerator programme investments, verbal angel interest and circulating term sheets each tell a prudent buyer something. They do not decide the value either. A programme fee paid for a place and support is different evidence from a negotiated price. A conditional commitment is different from a completed one. A liquidation preference ahead of the ordinary shares can reduce the value of the ordinary shares. The work is to weigh each item and write down why. Adding value with no evidence is as wrong as leaving it out.

4. Agreeing vesting informally and valuing as if nothing is restricted. Agreed but undocumented reverse vesting may already need to be treated as a restriction, depending on its substance and effect on value. Both AMV and UMV are needed, and the s 431 election is doing real work, not sitting in the file as a precaution.

5. Getting the order of documents wrong, or never choosing one. Each of the founders' agreement, the IP assignment, the service agreements and the investment documents changes the facts the valuation rests on. Choose the order for a real reason, record it and revisit the valuation if it moves. Where SEIS or EIS investors are involved, the issue also has to be placed against the investment arrangements. Issuing before a term sheet is signed can help with the SEIS and EIS arrangements tests, but it does not take the term sheet out of the valuation, because a prudent buyer would normally ask about financing that is under discussion.

6. Choosing the wrong mechanism. Issuing new shares dilutes existing holders without a disposal by them. A transfer from an existing shareholder is a disposal for that person and carries its own tax position. An existing holder who subscribes for nothing new makes no acquisition, so there is nothing for them to value, elect or report. Where the intended ownership percentages cannot be achieved using the existing share capital, consider whether a subdivision or another appropriate company law mechanism is required. The final shareholding should accurately reflect the agreed commercial position, with any acquisition, disposal or restructuring considered for tax purposes.

7. Missing the diary. Three dates attach to every issue and none of them comes with a reminder. The election falls due 14 days after acquisition. The arrangement has to be registered with HMRC. The return is due by 6 July after the tax year [10].

There is also a cross-border point. A US taxpayer receiving shares that vest faces a separate 30 day election under IRC §83(b) and a different valuation standard in §409A for option strike prices. UK advice should stay within the UK analysis and coordinate early with a US adviser. The companion article on a Delaware flip covers how the two timetables meet.

What these matters have in common is more useful than the list. In each there is a priced round, convertible instrument or term sheet in view. In each there is a race between the share issue and the documents that change the facts. In each there is a short window between instruction and signature, and no payroll yet. The facts were fixed at the issue date, the tax followed the value and the restrictions at that date, and fixing a gap was cheap before the issue and expensive after it.

Do EMI options or growth shares change the picture?

EMI options are ERS options with a relief. A qualifying EMI option can generally be granted without an income tax charge. Where the exercise price is at least equal to the market value of the shares at grant, and the EMI conditions remain satisfied, exercise will normally also be free of income tax. Capital gains tax will generally arise when the shares are subsequently disposed of. Different treatment can apply where the option was granted at a discount or a disqualifying event has occurred [12]. EMI is the one route where HMRC's Shares and Assets Valuation team will agree a value before the event, using form VAL231, and an agreed valuation is typically valid for 90 days if the company's circumstances do not change [12].

EMI helps less with founders than people expect. It applies to options, not to shares issued on day one. An employee with a material interest, meaning more than 30% of the ordinary share capital, cannot hold EMI options. The employee must meet the working time commitment, which is generally 25 hours a week or, if less, 75% of working time. The company must be independent and carry on a qualifying trade. From 6 April 2026 the company limits for most qualifying companies are fewer than 500 full-time equivalent employees and gross assets of up to £120 million, with a £6 million company-wide cap on unexercised options and £250,000 per employee. The increased thresholds do not apply to certain specified companies in Northern Ireland, which remain subject to the previous limits. The government proposes to remove the separate EMI grant notification requirement for options granted on or after 6 April 2027, with grants instead reported through the annual EMI return [12]. The annual EMI reporting requirement remains. EMI is useful for the first hires and the wider team. It is not a way to avoid the founder share analysis.

Growth shares are an alternative where a co-founder joins a company that already has value. The new holder takes a class with a hurdle set at the current value, so they share only in growth above it. Because the economic entitlement at the start is low, the UMV at acquisition can be low on any view of what the company is worth. The costs are an amendment to the articles, investor acceptance and extra care on valuing the hurdle. Growth shares can still be restricted securities, so the s 431 analysis does not go away.

How does HMRC approach employment-related securities?

HMRC treats ERS as a self-assessment area. The company and the individual decide the value and the treatment, and HMRC reviews afterwards. Four features of that approach matter.

HMRC does not usually rule on value in advance. Its valuation manual says valuation issues are excluded from pre-transaction rulings, with a narrow discretion in exceptional cases where many employees are involved and the transaction is transparent [5]. EMI is the exception, because agreeing a value is part of the scheme. For founder shares outside EMI the protection is the file.

HMRC checks values after the event. Where employees or directors acquire unlisted shares, an officer can refer the value to the Shares and Assets Valuation team, which advises whether it can be accepted or whether a formal valuation is needed [5]. The referral asks what elections were made and what rights attach to the shares, so the election and the articles are read alongside the number.

The ERS return is the main source of information. It tells HMRC who acquired which shares, when, at what price and whether an election was made. In my experience an enquiry usually starts where a founder issue at or near nominal value is followed soon after by a priced round, or where the value on the return sits far below a nearby round price.

The file HMRC expects is a dated one. That means a valuation at the acquisition date, the information relied on, the rights and restrictions, the methods considered and rejected, how each price signal was treated, the board minutes, the signed election and the filed return. Expect questions on any gap between the figure used and the evidence around it.

The consequences of getting it wrong follow the usual rules. HMRC can generally assess back four years, six where there is carelessness and twenty where the behaviour is deliberate [13]. Inaccuracy penalties on the individual's return depend on behaviour and can reach a percentage of the extra tax [13]. Late ERS returns carry automatic penalties, covered below.

Which filings and deadlines apply?

Each of these tends to sit with a different adviser, which is why they get missed. Check each against current wording rather than relying on a checklist, including this one.

The most common reporting question is whether a company with no payroll has to register and file. The statute does not carve out companies without a PAYE scheme. HMRC has published an administrative practice that has excused non-tax-advantaged returns where no company in the group or under common ownership has a PAYE scheme and there is no PAYE obligation at all [11]. It is practice and not law, it does not deal with what happens when PAYE registration follows later, and I do not rely on it. A company with no payroll can add PAYE solely to use the ERS online service [11]. If PAYE registration falls in the same tax year as the share issue, I take the conservative route of registering the arrangement and including the acquisition and the election in that year's return. The cost is small and the position is clean.

One-off founder issues go on the "other" template, not a tax-advantaged one [10]. Returns for ceased arrangements, and nil returns for live ones, still have to be filed. Keep a copy of every return, because HMRC's online service does not give one back.

In what order should a founder share issue happen?

You can do every step correctly and still pay tax you did not need to, because the steps happened in the wrong order. A sequence that works:

1. Settle who receives shares and why. Decide the mechanism, the class and whether a new issue or a transfer is right. Note who makes no acquisition and needs nothing.
2. Settle the terms that affect value. Vesting, leaver provisions, transfer restrictions and any amendment to the articles, including terms agreed in conversation and not yet drafted.
3. List every price signal and open commitment. Previous issues, convertible instruments, programme investments, angel interest, term sheets and any SEIS or EIS plans, with the date of each.
4. Fix the valuation date as the issue date. Value AMV and UMV as at that date, on the information a prudent buyer would ask for, and record the weight given to each signal.
5. Choose the order of the other documents. Founders' agreement, IP assignment, service agreements and investment documents. Record the commercial reason for the order, and revisit the value if the order changes.
6. Complete the issue. Board resolution, allotment, payment of the subscription price and the register of members, each dated consistently with the valuation.
7. Sign the s 431 election on the day of issue. Keep it with the transaction papers.
8. Register the arrangement and diarise 6 July. Confirm whether PAYE is registered or about to be.
9. Coordinate the US side. Any §83(b) election runs for 30 days on its own clock and needs a US adviser.
10. Revisit the file at each later event. A priced round, a Delaware flip, a leaver or an offer each restarts part of the analysis.

What should a founder do now?

The problem in most founder share issues is not poor drafting. Lawyers draft the documents competently and accountants file the returns. It is the hand-off that goes wrong. The legal timetable is driven by the investment and the tax timetable is driven by dates the lawyers do not own, and the valuation sits in between with nobody holding it.

Here is an anonymised example of the shape it takes. A pre-revenue UK company was about to issue a large minority stake to an incoming co-founder, alongside an accelerator's convertible instrument, verbal angel interest at a much higher figure and unsigned term sheets. There was no revenue, no assigned IP and no signed service agreement. The hypothetical buyer knows all of that, so the work was to engage with each item, say why it did or did not bear on the value of that holding on that date, and reach a figure with reasons. A valuation that starts from a target number is a valuation HMRC will test. The share issue went ahead of the documents that would change the picture, for stated commercial reasons, and the election was signed that day. A second matter a few weeks later raised the same questions with different numbers.

Before you issue shares, test three things. What does the valuation say about each price signal on the record, and would you be comfortable explaining that to HMRC? Which restrictions have been agreed, in any form, and does the election cover them? And what is the date of each of the 14 day election, the registration and the 6 July return, and who owns each one?

If you are about to issue shares to a co-founder or a first hire, or you have already done so and are not sure the paperwork is in place, the Structure Review works through it on your own facts. The companion briefing on what happens when an employee shareholder leaves covers the exit side of the same rules, and the free Exposure Score is a reasonable first pass on where the structural pressure sits.

This article is general commentary and not advice, and no action should be taken on it without advice on the specific facts. Statutory references and HMRC guidance should be confirmed as current at the time of any transaction. Several areas covered here turn on the particular facts, including whether shares are employment-related securities, whether a restriction is caught by s 423, the market value at a given date, whether shares are readily convertible assets and whether a reporting exemption applies, and each can differ materially between matters that look similar. US points, including §83(b) elections and §409A valuation practice, require US specialist advice.

Sources

1. ITEPA 2003 s 421B, on securities acquired by reason of employment, the deeming rule in s 421B(3), the extension to former and prospective employment, and the definitions of acquisition, employment and employment-related securities. https://www.legislation.gov.uk/ukpga/2003/1/section/421B
2. HMRC Employment Related Securities Manual, ERSM20210 on the meaning of "by reason of employment", ERSM20215 on the deeming provision and HMRC v Vermilion Holdings Ltd [2023] UKSC 37, ERSM20220 on family and personal relationships, and ERSM20240 on the meaning of employee. https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm20210 · https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm20215 · https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm20220 · https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm20240
3. HMRC Employment Related Securities Manual, ERSM140040 on the "other" template, including the position on initial subscriber shares and further allotments on incorporation, and the statement that shares not requiring a report are still employment-related securities. https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm140040
4. ITEPA 2003 s 421(1), importing the capital gains meaning of market value; TCGA 1992 ss 272 and 273; and HMRC Shares and Assets Valuation Manual SVM109040 and ERSM20400. https://www.legislation.gov.uk/ukpga/1992/12/section/272 · https://www.legislation.gov.uk/ukpga/1992/12/section/273 · https://www.gov.uk/hmrc-internal-manuals/shares-and-assets-valuation-manual/svm109040 · https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm20400
5. HMRC Shares and Assets Valuation Manual SVM109020 on the checking of valuations and the exclusion of valuation from pre-transaction rulings, and ERSM220070 on valuation issues for unlisted securities. https://www.gov.uk/hmrc-internal-manuals/shares-and-assets-valuation-manual/svm109020 · https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm220070
6. ITEPA 2003 Part 7 Chapter 3C, ss 446Q to 446W, on securities acquired for less than market value; HMRC ERSM70110 on the computation; and HMRC Employment Income Manual EIM12260. https://www.legislation.gov.uk/ukpga/2003/1/part/7/chapter/3C · https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm70110 · https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim12260
7. ITEPA 2003 s 423 on the meaning of restricted securities, with ss 425 to 428 on the exemption and later charges, and HMRC ERSM30300 (initial charge under s 62), ERSM30310 and ERSM30370 (no charge on acquisition where a forfeiture condition lasts five years or less). https://www.legislation.gov.uk/ukpga/2003/1/section/423 · https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm30300 · https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm30310 · https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm30370
8. ITEPA 2003 s 431 on elections to disapply restrictions, with s 431A on deemed elections; HMRC ERSM30450 on the election and ERSM30470 on deemed elections for tax-advantaged schemes. https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm30450 · https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm30470
9. ITEPA 2003 s 702 on readily convertible assets; HMRC ERSM170030; and HMRC Employment Income Manual EIM11913 on the position where there are no trading arrangements when the asset is provided. https://www.legislation.gov.uk/ukpga/2003/1/section/702 · https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm170030 · https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim11913
10. HMRC guidance on employee share scheme reporting requirements, and Employment-Related Securities Bulletin 65 (April 2026) on the 6 July deadline, nil returns and the automatic £100 penalty. https://www.gov.uk/guidance/employee-share-schemes-reporting-requirements · https://www.icaew.com/insights/tax-news/2026/may-2026/6-july-deadline-to-submit-share-scheme-returns
11. HMRC Information Note for Employers, Employment Related Securities: Registration, Self-certification and online filing (10 December 2013), on adding PAYE solely to use the ERS service; and Employment Related Securities Bulletin 20 (July 2015) on the practice for companies with no PAYE scheme. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/264592/employment-securities.pdf
12. ITEPA 2003 Sch 5; HMRC guidance on enterprise management incentives, including the limits applying from 6 April 2026; form VAL231 for EMI valuation checks; and Employment-Related Securities Bulletin 68 (August 2026) on the removal of the EMI grant notification for options granted on or after 6 April 2027. https://www.gov.uk/government/collections/enterprise-management-incentives · https://www.gov.uk/government/publications/asset-valuation-request-for-a-share-valuation-val231
13. Taxes Management Act 1970 ss 34 and 36 on assessment time limits, and Finance Act 2007 Sch 24 on penalties for inaccuracies. https://www.legislation.gov.uk/ukpga/1970/9/section/34 · https://www.legislation.gov.uk/ukpga/1970/9/section/36 · https://www.legislation.gov.uk/ukpga/2007/11/schedule/24
14. HMRC guidance on share valuations for employee shareholder status, listing the events after which an agreed valuation should be refreshed. https://www.gov.uk/guidance/share-valuations-exchange-shares-for-employee-rights

UK statutory and guidance references cited above: ITEPA 2003 ss 421, 421B, 421JA, 421K, 423, 425 to 432, 446Q to 446W, 446X, 702, Part 7 Chapters 2 to 5 and Sch 5; TCGA 1992 ss 272, 273; TMA 1970 ss 34, 36; FA 2007 Sch 24; CTA 2009 Part 12. US references: IRC §§83(b), 409A.