ARTICLE · 05 DECEMBER 2005

Relaxation of Form 42 Requirements

CMS Cameron McKenna Nabarro Olswang

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On 28 November 2005, the Chancellor of the Exchequer announced changes made to the reporting requirements of Employment-Related Securities on Form 42. When an employer issues shares to employees, the value of the issue may be subject to both income tax and NICs.

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Mark Nichols

On 28 November 2005, the Chancellor of the Exchequer announced changes made to the reporting requirements of Employment-Related Securities on Form 42. When an employer issues shares to employees, the value of the issue may be subject to both income tax and NICs. The issue is disclosed to HMRC on Form 42, which allows HMRC to check that the statutory rules are being properly applied, and provides them with data that enables them to assess the impact of changes in policy.

In order to reduce the compliance burden and administration costs for new small companies whose founder shareholders are also directors or employees, it will no longer be necessary for Form 42 to be filed in these circumstances where certain detailed conditions are met.

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