Employee shareholder shares

By Tolley

The following Employment Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Employee shareholder shares
  • Important note
  • Background
  • Tax exemption for advice provided
  • Employee shareholder shares

Important note

In the Autumn Statement given on 23 November 2016, the Chancellor announced that the tax advantages associated with employee shareholder shares are being withdrawn for shares given under agreements entered into on or after 1 December 2016 (2 December 2016 in cases where the potential employee shareholder (ES) receives professional advice in relation to the share offer on Autumn Statement day before 1.30pm). See the Autumn Statement , para 4.31.

The legislation on ES status itself will be repealed in due course.


In a move intended to improve flexibility in the labour market, in 2013 the government created a new form of employment status and labelled it as “an employee shareholder”. Companies have been able to offer this new status to selected employees or prospective employees since 1 September 2013.

An ES is an employee who has, by agreement with his employer, given and amended certain employment rights in exchange for shares in his employer’s company or in its parent company. Those shares must be awarded to the employee free of charge, no consideration may be given for employee shareholder shares beyond the individual’s agreement to the reduction in his employment rights. For more details, see the Employee shareholder status guidance note.

In order to achieve ES status, six conditions must all be met:

  • the individual and the company must both agree that the individual will become an ES
  • shares in the employing company or its parent company with a market value of at least £2,000 must be issued or allotted fully paid to the individual
  • the individual must not pay for the shares in any way – entering into the agreement to become an ES is the only consideration allowed
  • the

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