Employee Shareholder Contracts – Budget 20 March 2013

Chancellor George Osborne previously announced a radical new style of

employment contract which comes into force by 1 September 2013.

If taken up, new employees will forfeit their rights to redundancy, unfair

dismissal, time off for training, the right to flexible working patterns and return

from maternity leave will need to be notified 16 weeks in advance and not 8 as

is usual practice.

In exchange for this loss of rights, they will be issued with shares in the company

worth between £2,000 and £50,000. Should the employee leave or be dismissed,

the company will be able to buy back the shares and Capital Gains Tax will not be

payable on any profit.

The 2013 budget announced that the first £2,000 of share value that anyone

receives under the new status will be free from income tax and NICs. This will be

of particular benefit to anyone receiving the minimum amount of shares, as it

will ensure that no tax is due when they receive their shares. This will take effect

from 1 September 2013, when the new status comes into force.

Back to Main Page – Budget 20 March 2013

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