At a press conference last week, Deputy Prime Minister Nick Clegg suggested that he would like to see the recently introduced Employee Shareholder status abolished and the tax savings passed on to all in the form of increased personal allowances.

Employee Shareholder status was introduced in September 2013 and allows employees to give up certain employment rights in exchange for a stake in their employer’s business of between £2,000 and £50,000.  These shares are exempt from Capital Gains Tax when eventually sold, the idea being that employees will be encouraged to help grow the business they work for to maximise their return.  Employment rights they forfeit include rights relating to unfair dismissal, redundancy, flexible working and time off for training.

Nick Clegg indicated that he sees Employee Shareholder status as a “pet project” of the Conservatives and would like to see the savings, along with further savings from cancelling proposed tax breaks for married couples, used to increase still further the personal tax allowance which is currently at £9,440 and rises to £10,000 in April 2014.

Recent figures have indicated that only 19 companies requested information about implementing employee shareholder schemes in the six months to December 2013.  This slow start suggests that the cost of the scheme to the taxpayer is likely to be far lower than originally anticipated, at least for the time being, and certainly not enough to allow large scale increases in personal allowances if abolished.

At Backhouse Solicitors we are employment law specialists, helping employers and employees resolve their problems through expert, cost-effective advice.  If you would like further information on employee shareholder status, whether you are a business or an employee, please get in touch today.

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The Backhouse Solicitors Team