Definition of employee stock ownership plan ESOP/ employee shareholder status

A means for employees to acquire ownership of shares in their company. Shares may be sold to employees or given free of charge, depending on the programme.

Gains made on disposals of up to £50,000 worth of ‘employee shareholder’ shares are exempt from CGT (subject to certain conditions) from 1 September 2013, and there will be no income tax charge arising on a distribution where a company buys back CGT-exempt shares.There is also legislation which provides that income taxand National Insurance Contributions (NICs) respectively will not be chargeable on the first £2,000 of share value received by eligible employee shareholders. [1]

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