Employee shareholders get further tax break
The Chancellor has introduced a widely expected tax break for the new Employee Shareholder status, to be implemented on 1 September 2013.A quick reminder of the new status: employers will be able to
The Chancellor has introduced a widely expected tax break for the new Employee Shareholder status, to be implemented on 1 September 2013.
A quick reminder of the new status: employers will be able to offer shares to their employees in return for those employees giving up certain employment rights (broadly statutory redundancy pay and unfair dismissal rights). The minimum value of those shares on acquisition by an employee must be £2,000. Gains on the sale of shares worth up to £50,000 will be completely exempt from capital gains tax.
One of the main criticisms of the proposal was that under current employment tax rules, offering shares at below a market value can trigger an income tax and NICs charge on the element of undervalue. This would have dramatically reduced the impact of the proposal.
The Chancellor has confirmed that the first £2,000 worth of shares will be free of income tax and NICs. This is a welcome tax relief for what could turn out to be a popular means of incentivising employees and executives using equity in a tax efficient way.
I shall be providing more details on the employee shareholder status when legislation is finalised, and the proposal implemented this autumn.
A quick reminder of the new status: employers will be able to offer shares to their employees in return for those employees giving up certain employment rights (broadly statutory redundancy pay and unfair dismissal rights). The minimum value of those shares on acquisition by an employee must be £2,000. Gains on the sale of shares worth up to £50,000 will be completely exempt from capital gains tax.
One of the main criticisms of the proposal was that under current employment tax rules, offering shares at below a market value can trigger an income tax and NICs charge on the element of undervalue. This would have dramatically reduced the impact of the proposal.
The Chancellor has confirmed that the first £2,000 worth of shares will be free of income tax and NICs. This is a welcome tax relief for what could turn out to be a popular means of incentivising employees and executives using equity in a tax efficient way.
I shall be providing more details on the employee shareholder status when legislation is finalised, and the proposal implemented this autumn.