Effective September 1, 2013, companies have the ability to offer shares to employees in return for the employee becoming an employee shareholder and surrendering certain employment rights, such as the right not be to unfairly dismissed and the right to redundancy pay.
Provided specific conditions are met, the company can claim relief from corporation tax with respect to the cost of the employee shareholder shares and the employee can benefit from beneficial tax treatment upon receipt and sale of the shares. In particular, the employee does not pay income tax and national insurance contributions on the first £2,000 worth of shares received.
In addition, any gains made on the disposal of up to £50,000 worth of shares are exempt from capital gains tax. The shares given to the employee must be fully paid up and worth no less than £2,000.
If you are interested in obtaining further details on the requirements and benefits of the employee shareholder status, please contact your GES attorney.
Boost to Certain Tax-Qualified Plans Announced
In his Autumn Statement (issued in December 2013), the Chancellor of the Exchequer has announced a significant boost to certain tax-advantaged all-employee share plans.