Form 42 — are you ready?

Now that the tax year 2012–13 has ended, companies must ensure they fulfill their reporting requirements by completing a Form 42 in respect of any share transactions involving employees that have taken place during the tax year. Companies must have submitted a completed Form 42 to HM Revenue & Customs (HMRC) by 6 July 2013. Failure to meet these reporting obligations could result in significant penalties.

Most transactions involving the company’s shares and employees will need to be reported. Some of the more common arrangements are listed here: the grant or exercise of options or the surrender of options for consideration; awards of or the vesting of restricted shares or conditional share awards; the purchase of shares by employees; arrangements that change the value of shares held by employees; and the sale of employees’ shares for more than their market value.

Directors will be employees for this purpose. Share transactions involving not only present employees but also former and prospective employees must be reported…

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