Abolishing Employee Shareholder Status

13 December 2016

Abolishing Employee Shareholder Status

13 December 2016

As announced at Autumn Statement 2016, the government will legislate in Finance Bill 2017 to withdraw the Capital Gains Tax exemption and the Income Tax reliefs in respect of shares received as consideration for entering into most Employee Shareholder Status agreements.

Agreements entered into before 1 December 2016, or before 2 December 2016 where independent advice was received before 1:30pm on 23 November 2016, will retain their tax benefits.

The legislation will:

  • remove the Income tax and National Insurance Contributions relief which applies to the first £2,000 worth of Employee Shareholder shares received by an individual
  • remove the Capital Gains Tax exemption which applies to such shares and
  • remove the provision which ensures that, when a company buys Employee Shareholder shares back from an Employee Shareholder, the consideration is not a distribution in the shareholder’s hands.

Geographical extent - The changes apply to all UK residents.

Further information is detailed in the Draft legislation (provisions 29-31) and Tax Information Impact Note (TIIN).

If you have any questions about this change, or comments on the legislation, please contact Ben Martin on 03000 520630 or email: benjamin.martin@hmrc.gsi.gov.uk.