Income Tax (Earnings and Pensions) Act 2003 section 326B

Advice relating to proposed employee shareholder agreements

Section 326B provides an income tax exemption for the provision of, and payment for, independent advice given to employees in connection with proposed employee shareholder agreements.

• No income tax arises on the provision of relevant independent advice about a proposed employee shareholder agreement, nor on the employer's payment or reimbursement of reasonable costs for obtaining that advice.
• Relevant advice covers non-tax advice on the terms and effect of the employee shareholder agreement, as well as tax advice limited to a general explanation of the tax consequences of employee shareholder agreements.
• An employee shareholder agreement is one under which an employee becomes an employee shareholder, as defined in the Employment Rights Act 1996.
• A relevant independent adviser has the same meaning as in the Employment Rights Act 1996, which sets out the qualifications and independence requirements for such advisers.