The Government will abolish tax advantages for shares awarded under the “employee shareholder status” due to evidence suggesting it is mainly being used for tax planning.
The measure means the capital gains tax exemption and the income tax and National Insurance contributions relief for shares awarded under Employee Shareholder Status agreements will be closed down.
Today’s Autumn Statement says the tax advantages will be abolished for arrangements entered into on, or after, 1 December.
The statement says: “The status itself will be closed to new arrangements at the next legislative opportunity. This is in response to evidence suggesting that the status is primarily being used for tax planning instead of supporting a more flexible workforce.”
According to the Treasury’s Autumn Statement policy costings document the Exchequer impact of the measure will be positive with £50m expected to be raised by 2021/22.
Hammond says: “We will abolish the tax advantages linked to Employee Shareholder Status in response to evidence it is primarily being used for tax-planning purposes by high-earning individuals.”
Blick Rothenberg partner Genevieve Moore says: “Employee Shareholder Status gets hit again, and looks like this is now on its way out, having been ‘abused’ since its introduction just a few years ago.”