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The Treasury’s controversial new employment status is set to go in to operation at the start of next month.
The employee-shareholder arrangement will see staff members give up a number of workers’ rights from 1 September in exchange for at least £2,000 of tax-friendly shares in their employer’s company.
Finance Act 2013 provides reliefs for the shares, meaning income tax and National Insurance will usually not be chargeable on the first £2,000 of share value received, and there will usually be a capital gains tax exemption for up to £50,000 of shares.
The Treasury’s controversial new employment status is set to go in to operation at the start of next month.
The employee-shareholder arrangement will see staff members give up a number of workers’ rights from 1 September in exchange for at least £2,000 of tax-friendly shares in their employer’s company.
Finance Act 2013 provides reliefs for the shares, meaning income tax and National Insurance will usually not be chargeable on the first £2,000 of share value received, and there will usually be a capital gains tax exemption for up to £50,000 of shares.
Costs of independent legal advice funded by an employer on behalf of received by a person considering an employee-shareholder offer will not usually be a taxable benefit.
Businesses awarding employee-shareholder shares may propose a share valuation to HMRC in advance. The department will make an agreement on the valuation for tax purposes that will be effective for 60 days. There is no requirement for firms wishing to offer a new-style contract to obtain approval from the Revenue.
Employers who have awarded shares must provide details on form 42 (employment-related securities), which will be amended to include a new section relating to the shares
Employee-shareholder arrangements were widely criticised after being announced by the chancellor, George Osborne, last October, when they were known as employee-owner. The Law Society called on the government to cancel plans for the new status, while Taxation’s editor, Mike Truman, called the proposals “squalid and disreputable”.
A consultation by the Department of Business, Innovation and Skills attracted few positive comments but raised many concerns about the operation of the employment contract, which will force workers to sacrifice rights relating to unfair dismissal, statutory redundancy pay, flexible working and training.
