Tax Rules for Special Employee Shareholder Status

Published / Last Updated on 10/06/2022

To be classed as having employee shareholder ‘status’ you must own shares in your employer’s company worth £2,000 or more when you got them. 

In addition, provided between both you and a close connected party (family member, partner or spouse) you own less than 25% of the total shares in the company i.e., you are not deemed a controlling director, the following rules apply.

Buying/Being Given “Employee Shareholder” Shares

  • Before 1st December 2016 - You will not have had to pay income tax or national insurance on the first £2,000 value/worth of “employee shareholder” shares when you got them.  Any excess above this would have been subject to income tax and national insurance.
  • After 1st December 2016 - You then became subject to income tax and national insurances on the value/worth of all “employee shareholder” shares if you got them after this date..
  • This means that technically “Employee Shareholder” Status ended on 1st December 2016 as the income tax/national insurance benefit stopped on all employee shareholder shares.

Selling “Employee Shareholder” Shares (if you are still lucky enough to have them)

  • Before 17th March 2016 - When you sold “employee shareholder” shares worth up to £50,000 in value when you got them, you were not be liable to capital on those shares when you sold them.
  • After 17th March 2016 - When you sell “employee shareholder” shares with actual gains/profits of up to £100,000 (not the value of when you got them this time), you will not be liable to capital on those shares when you sell them.

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