Taxation of Chargeable Gains Act 1992 section 236C

Only first £50,000 of shares under associated agreements to be exempt

Section 236C limits the capital gains tax exemption for employee shareholder shares to the first £50,000 worth of shares acquired under connected employee shareholder agreements.

• Employee shareholder shares are only exempt from capital gains tax if the total value of shares acquired under the relevant agreement, and any associated agreements, does not exceed £50,000 at the time of acquisition.
• The £50,000 limit takes into account shares acquired under previous employee shareholder agreements with the same employer or with associated companies (i.e. companies where one controls the other, or both are controlled by the same person or persons).
• Where a single day's acquisition takes the employee over the £50,000 threshold, the shares are split into two notional tranches: an exempt tranche up to the limit and a non-exempt tranche for the remainder.
• Shares are valued at their unrestricted market value on acquisition, meaning any contractual restrictions attached to the shares are disregarded when determining their market value for the purposes of the £50,000 limit.