A guide for employees has also been published and aims to provides good practice guide on employee ownership, the benefits it offers and how employees can request it. It doesn’t provide legal advice or attempt to provide all the answers but it indicates the key questions and stages. It also provides further sources of information.
EMPLOYEE SHAREHOLDER STATUS IN FORCE FROM 1 SEPTEMBER 2013
23 July 2013
The Growth and Infrastructure Act 2013 (Commencement No. 3 and Savings) Order 2013 has been made which will create the new employment status of employee shareholder.
The Order 2013 No.1766 (C. 72) will bring into force, on 1st September 2013, section 31 of the Growth and Infrastructure Act 2013 (c. 27). That section amends the Employment Rights Act 1996 under section 205A, in order to create the new employment status of employee shareholder to come in to force on 1 September 2013.
Employee shareholder status guidance
3 September 2013
The government has published three sets of guidance on the new employment status of employee shareholders which came into force on 1 September 2013.
The process for offering or accepting a job on an employee shareholder basis is different to jobs offered on other employment contracts. Use the Department for Business, Innovation & Skill's guidance to help you decide:
if your company wants to take on an employee shareholder if you want to become an employee shareholder.
What is employee shareholder status?
Employee shareholders have different employment rights to employees, and are awarded at least £2,000 worth of shares in their employer or a parent company. There is no requirement for businesses wishing to offer an employee shareholder contract to obtain HMRC’s approval or agreement.
For detailed information on the tax treatment and values of shares in relation to the employee shareholder employment status, see HMRC’s employee shareholder guidance .
Income Tax and National Insurance Contributions on employee shareholder shares
Income Tax and NICs is not usually chargeable on the first £2,000 of share value received by an employee shareholder. This is because the employee shareholder is deemed to have made a payment of £2,000 for the shares. The normal rules for the taxation of urities apply to any value received in excess of £2,000. The ‘deemed payment’ only applies on the first occasion on which an individual acquires ‘qualifying shares’ under an employee shareholder agreement with their employer, and is subject to the employee shareholder not having a ‘material interest’ in the company.
For more information see HMRC's share schemes technical guidance .
Government seeks views on further simplification of employee ownership
CIPP Policy News Journal
16/04/2014, Page 268 of 519
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