Guidance on making a valid restricted security election

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Guidance on making a valid restricted security election
  • Approved forms
  • Information required

Guidance on making a valid restricted security election

The procedure for making joint restricted securities elections is the same regardless of whether the election is made under section 425(3), 430 or 431 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). To be valid, an election must be made:

  1. by both the employee (or director or other office-holder) and the employer (note that it is the employer rather than the company issuing or transferring the employment-related securities (if different) that must enter into the election together with the employee)

  2. in an approved form (for which, see below), and

  3. within 14 days after:

    1. the acquisition (in the case of elections made under ITEPA 2003, s 425(3) or 431), or

    2. the chargeable event (in the case of an election made under ITEPA 2003, s 430)

There is nothing to prevent the election being made before the relevant acquisition or chargeable event. There is also no objection to making ‘protective’ elections eg where an employee believes that securities are in fact being acquired at unrestricted market value but wishes to make an election just in case it turns out that they are not (given the uncertainties of the valuation process).

The election (or the relevant part of the election in the case of a two-part election) must be signed and dated by the employee (or director or

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