The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal
Abolishing Employee Shareholder Status 13 December 2016
Draft legislation has been published to remove most of the tax reliefs associated with shares received in return for entering into an Employee Shareholder agreement on or after 1 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.
Draft legislation (provisions 29-31) and a TIIN were published on 23 November 2016.
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 .
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