HMRC has revised its Shares and Assets Valuation Manual to take into account the introduction of employee shareholder employment status on 1 September 2013. This new employment status will apply where an employee receives fully paid up shares in the employer company or in its parent undertaking, with a value of at least £2,000 and certain other conditions are met.
If the shares are worth less than £50,000 at the time they are awarded, they will be exempt from Capital Gains Tax if they are subsequently disposed of. If the shares are worth more than £50,000, the new employment status will still apply, although the exemption from Capital Gains Tax will only apply to the first £50,000 of shares.
For valuation purposes when determining whether the shares are worth at least £2,000 the value will be the actual market value of the shares, taking into account any restrictions. However, the value of the shares for the purposes of the £50,000 upper limit will be the unrestricted market value, without taking into account restrictions.
Applicants will be able to apply to HMRC for a valuation check, using form VAL 232, before shares are awarded.
Further details can be found on HMRC’s website here.