Autumn Statement 2016 – A U-turn on employee shareholder status

A U-turn on Employee shareholder status

A new employment status was introduced in 1 September 2013, that of Employee shareholder.  The idea was that in return for giving up certain employment rights, employee shareholders would receive free shares worth at least £2,000 in their employer’s parent company. The first £2,000 of these would be free of the normal tax on employment related securities, and the gain on a subsequent disposal of up to £50,000 worth of these shares would be free of capital gains tax.

HMRC guidance issued on the introduction of employee shareholder status indicated an employee shareholder would have a stake in their employing company and that this might lead to greater responsibility, improving their productivity and going the extra mile to ensure that it does well.  Today the Chancellor announced that the tax advantages linked to Employee Shareholder status were being abolished in response to evidence that it is being primarily used for tax-planning purposes by high-earning individuals.  Shares received under an arrangement made before 1 December 2016 will not be affected.