On 3 December 2012, the UK Government published its response to a consultation paper on the Chancellor’s proposal for implementing a new “employee shareholder” status. Whilst acknowledging that only “a very small number of responses welcomed the scheme”, the Department for Business Innovation & Skills (“BIS”) still intends to proceed with implementing the new employment status.
The new employment status -
Currently, the two main categories of employment status in the UK are ‘employee’ and ‘worker’. Whether an individual is an employee or a worker determines what rights and obligations the individual may have; for example, workers do not enjoy the same right as employees to statutory redundancy pay and maternity pay, or to protection from unfair dismissal. Under the proposed third type of employment status, individuals may exchange certain UK employment rights for rights of ownership, in the form of shares, in the business in which they work. Any gains that the individuals make on the first £50,000 worth of shares will be exempt from capital gains tax (“CGT”).
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