On 8 October 2012 the Government announced its intention to introduce a new ‘employee shareholder’ employment status. Individuals adopting the status will receive between £2,000 and £50,000 of Capital Gains Tax (CGT) exempt shares. They will have to give up certain employment rights in exchange for shares in the employer company.
The normal tax and national Insurance rules attaching to shares acquired by reason of employment will apply, including cooperation tax relief and no stamp duty payable on issue. The shares will be valued according to their unrestricted market value at thetime they are awarded and the company would have to buy them back at a treasonable value on surrender.
The rights that will have to be given up will include employment rights for unfair dismissal in some classes, certain rights to request flexible working and training and statutory redundancy entitlement. Additionally 16 weeks’ notice of the intention to return from maternity or adoption (compared to 8 weeks’ notice for other employees) will have to be given.
Employers can choose to operate this new employment status. All types of shares will be eligible for use and will take effect as part of a contractual arrangement between employer and the employee. Companies of any size will be able to use this status.
If you are interested in discussing this further please contact us for further information.