Taxation of Chargeable Gains Act 1992 section 236G

Relinquishment of employment rights is not disposal of an asset

Section 236G confirms that when an individual gives up certain employment rights in exchange for shares under an employee shareholder arrangement, that giving up of rights is not treated as a disposal of an asset for capital gains tax purposes.

• The section applies where an individual acquires shares as consideration for entering into an employee shareholder agreement under section 205A of the Employment Rights Act 1996.
• Under an employee shareholder arrangement, the individual gives up or forgoes certain statutory employment rights, such as unfair dismissal protection and the right to request flexible working.
• The relinquishment of these employment rights is not treated as a disposal of an asset for capital gains tax purposes, meaning no chargeable gain or allowable loss arises from the surrender of those rights.
• This provision took effect from 1 September 2013 and ensures that the only relevant capital gains tax event in an employee shareholder arrangement is a future disposal of the shares themselves, not the initial giving up of employment rights.