Why there is no late election
The section 431 election is a joint election by the employer and the employee to ignore all of the restrictions on the shares, which increases the amount charged to tax and NICs at acquisition and removes any future charge under the restricted securities rules. HMRC's Employment Related Securities Manual is explicit that it must be made not more than 14 days from the date of acquisition, and the following page states in terms that there is no extension of the time limit. There is no reasonable excuse route, no late claim and no fee that reopens it. The deadline is easiest to lose where the paperwork is governed by another country's law, typically a US profits interest or co-invest agreement where nobody on the US side has heard of section 431, which is why we treat the clock as running the moment any equity document is signed.
What the default regime costs you
Almost every share an employee takes in a private company is a restricted security, because leaver provisions, vesting schedules, compulsory transfer clauses and forfeiture terms all depress its value. Without the election you are taxed on that depressed value at acquisition, and the untaxed slice is deferred, not forgiven: when a restriction is lifted or the shares are sold, a proportion of the value at that point is charged as employment income at your marginal rate, potentially with National Insurance, rather than as a capital gain at 18% or 24% for 2026/27. On growth shares or private equity sweet equity that were worth little at subscription and a great deal at exit, that can be the difference between a capital gains bill and an income tax bill on the same money. Our share options and equity awards guide sets out the fact patterns where this bites hardest.
What you can still do
First, check whether the deadline has really passed. HMRC does not require its template: an election is valid if employer and employee agreed the key terms in writing in no less detail than HMRC's own form, whether by email or inside a share subscription agreement, and electronically signed elections are acceptable if they can be verified and stored, so a signed subscription agreement may already contain what you need. Second, quantify the exposure now rather than at exit, so the eventual employment income charge is budgeted and the PAYE and National Insurance position is understood. Third, watch for the next event: HMRC's manual notes that varying a restriction may create the opportunity for a fresh election, and any new award of shares starts its own 14-day clock. If a cross-border element is involved, the UK election and the US or other overseas treatment need to be handled in parallel from day one.