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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
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Employee shareholder shares: CG-exemption: only first £50,000 worth of shares are exempt: examples

TCGA/S236C

Example 1

A enters into an employee shareholder agreement with his employer, C Ltd. This is his only employee shareholder agreement. Neither A nor anyone connected with him has or has had a material interest in C Ltd (see CG56735). In consideration of the agreement he acquires over a period of time three successive tranches of shares in C Ltd. Tranche 1 has a value of £30,000; tranche 2 £20,000 and tranche 3 £10,000.

The shares in tranches 1 and 2 are exempt ES shares. The shares in tranche 3 are not exempt.

Example 2

B enters into an employee shareholder agreement with her employer, D Ltd. This is her only employee shareholder agreement. Neither B nor anyone connected with her has or has had a material interest in D Ltd (see CG56735). In consideration of the agreement she acquires over a period of time three successive tranches of shares in D Ltd. Each tranche comprises 10,000 ordinary £1 shares in D Ltd. Tranche 1 has a value of £15,000; tranche 2 £20,000 and tranche 3 £25,000.

All the shares in tranches 1 and 2 are exempt employee shareholder shares. Of the shares in tranche 3 a proportion: (50,000 - 35,000)/25,000 are treated as acquired before the others. Thus 6000 shares of tranche 3 (having a value of £15,000) are exempt employee shareholder shares. The remaining 4,000 are not exempt.