Tax breaks for employee shareholders Employee shareholders will benefit from a new measure to make the first £2,000 of shares received from an employer exempt from income tax and national insurance contributions (NICs). The move, announced in the Budget, is part of a wider government policy to introduce and support the take-up of employee shares. Last year it announced its intention to introduce a new "employee shareholder" employment status, allowing people who take up the status to receive between £2,000 and £50,000 of capital gains tax-exempt shares. In return for the shares, employees must forgo certain employee rights including unfair dismissal rights and their right to statutory redundancy payments as well as rights to request flexible working arrangements. Richard Proctor, tax partner at Grant Thornton, said: "This is another measure the government has been tinkering with. It is trying to encourage employee share ownership but also a flexible labour market, and this should mean an increase in the number of employees participating. It will stop people getting an unexpected tax charge with no cash to pay it with. The tax changes will apply to shares received through the "employee shareholder" status from September 1 2013. In other news, the government announced that employers will be able to increase the amount of low-cost or interest free loans from £5,000 to £10,000. Graham Farquhar, employment tax partner at Ernst & Young, said: "Employers can now provide interest-free non-taxable loans up to the value of £10,000 to employees commuting to work. It doesn't just apply to season ticket loans, although this is the most common use. It will apply to all loans made to employees by their employer that are below the threshold. This could be used to buy a car or even as a contribution for a deposit for a house.