What are the tax implications if someone is employed under an employee-shareholder agreement?
If an individual is employed under an employee-shareholder agreement, he or she agrees to give up certain employment rights in return for shares in the employer's company, which carry certain tax advantages.
Profits made by the employee shareholder on disposal of up to £50,000 worth of shares acquired under the employee-shareholder agreement will be exempt from capital gains tax (this is subject to anti-avoidance provisions). However, there is an individual lifetime limit of £100,000 on gains eligible for this capital gains tax exemption. This limit applies to employee-shareholder agreements entered into on or after 17 March 2016.
The first £2,000 worth of shares will be exempt from income tax and national insurance contributions (again, subject to anti-avoidance provisions).