Chancellor George Osborne announced in his Autumn Statement that the exemption will come into effect from April 2013.
He also said the government would consider options to reduce income tax and national insurance liabilities when employee shareholders receive the shares.
Chris Blundell, tax partner at MHA MacIntyre Hudson, said: “I think the real problem with giving employees free shares is that it may well be capital gains tax exempt in the end, but when you give them the shares, there will be tax for the employee.
“HM Revenue and Customs is going to be looking at ways of mitigating that. It may be that employees will pay the income tax when shares are sold, which will make it more attractive.”
But there is still scepticism over whether many employers will take up the scheme. Amanda Flint, tax partner at Grant Thornton, said that unless smaller employers had a commitment to employee share ownership, it would not be an attractive option because each time an employee leaves, their shares will have to be bought back by the employer.
