New "Employee Shareholder" Status

Since September 1, 2013, employees have been able to trade certain employment rights otherwise guaranteed by law for shares in their employer. Such employees will be regarded as having "employee shareholder" status and will be able to receive shares worth at least £2,000 in consideration of becoming an employee shareholder, with gains made on the disposal of such shares potentially being exempt from capital gains tax ("CGT").

There has been much scepticism about the new scheme since its announcement in October 2012, as the potential tax benefits under the original proposal did not seem to provide a sufficient incentive to employees to surrender their rights. However, the income tax and CGT reliefs introduced under the UK Finance Act 2013 are potentially extremely valuable, given that they can deliver a tax-free acquisition and disposal of shares worth up to £50,000 (valued at the date of acquisition).