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Is the exemption for employee-shareholder shares effective for National Insurance purposes?
The new employee-shareholder status came into force on 1 September.
Under the new regime employees will in exchange for certain workplace rights be able to receive shares in their employer’s company.
Income tax and National Insurance will not be chargeable on the first £2 000 of shares and up to £50 000 of shares will be exempt from capital gains tax.
Since the award of shares will be made in consideration of the relinquishment of rights under the employee’s contract of employment the value of the shares awarded is subject to a potential charge to class 1 National Insurance as earnings from the employment; see for example Hamblett v Godfrey 59 TC 694.
The fact that the shares represent a payment in kind is not fatal to such a potential charge.
This is because under the...
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