From Chancellor’s Autumn Statement on 23 November 2016 there was announcements around changes to Capital Gains Tax, specifically around ESS schemes and their abolition.
The basis of the Employee Shareholders Share Scheme (ESS) was designed and created so that individuals would have the ability to remove a number of their statutory employment rights and in return would receive shares in their company. This was introduced in 2013 and the scheme brought good tax advantages to the holder allowing shares to the value of £50,000 when acquired and were exempt from Capital Gains Tax when they reached their first disposal. This was however capped by the Chancellor in the 2016 budget so that the tax-free gains would only occur on the first £100,000 of gain.
As was announced and discussed as part of the Autumn Statement the scheme was primarily being used for tax-planning purposes by high-earning individuals and as confirmed the scheme would end on any arrangements that commenced on or after 1st December 2016. As such, any active schemes yet to complete will need to have had the ESS shares issued and required independent legal advice received before the 1st of December deadline.
