Confirmation of gains tax

The government has confirmed that staff who own shares in their employer, including members of sharesave schemes, will have to pay 18% capital gains tax on any gain above £9,200 from April 2008.

Employees will not qualify for the concession introduced last month whereby entrepreneurs will pay a 10% tax rate for up to the first £1m of lifetime capital gains. This is because employee shares are considered business assets.

John Whiting, tax partner at PricewaterhouseCoopers, said: “There is a £9,200 exemption and this will help most people who have a few shares in their employer.”

The new concession for entrepreneurs will be available to staff who invest a material stake of at least 5% in a company and are able to exercise at least 5% of the voting rights in it. But Whiting said this will mostly affect small firms.