Following a review of the recommendations of the Office of Tax Simplification (OTS) on simplifying tax-advantaged employee share schemes, the government will "implement a package of simplifications" to these schemes, with many of the changes coming into force in 2013. We expect draft amending legislation to be published in draft clauses for the Finance Bill 2013 on 11 December 2012.

For more information about the OTS proposals, see Legal update, Tax-advantaged share scheme simplification: HMRC response to OTS.

(See HM Treasury Autumn Statement document 2012, paragraph 2.93.)

HM Treasury and HMRC will work with the Department for Business, Innovation and Skills (BIS) to implement the government's response to the Nuttall review of employee ownership, including contributing to the development of "off the shelf" templates and toolkits. The government will report further on this in the 2013 Budget.

For more information about the Nuttall review, see Legal updates, Nuttall review of employee ownership: government response and Share buybacks: BIS consultation on implementation of Nuttall Review.

(See HM Treasury Autumn Statement document 2012, paragraphs 1.128 and 2.146.)

The 2012 Autumn Statement confirms the introduction of a new employee shareholder employment status with effect from April 2013 (originally the new status was referred to as "employee owner"). Individuals will receive capital gains tax (CGT) exempt shares in their employer worth at least £2,000, in exchange for agreeing to become employee shareholders (and with no other consideration permitted). Employee shareholders will not have certain employment protections and rights normally enjoyed by employees.

The government indicated that it was considering ways to reduce income tax and NICs on the acquisition of shares by employee shareholders on 3 December 2012. The 2012 Autumn Statement gives a little more information about this, stating that one option under consideration is for the employee shareholder legislation to deem that an employee shareholder pays £2,000 for their employee shareholder shares, for income tax and NICs purposes, with the result "that the first £2,000 of shares received under the new status would be free from income tax and NICs".

The possibility of income tax and NICs liabilities on acquisition of employee shareholder shares has always been a key concern about the practicality of the proposed new employment status. The government's latest proposal would eliminate income tax liabilities on acquisition for employee shareholders receiving the minimum value of employee shareholder shares (assuming that there is no joint election to tax the unrestricted value of the shares when acquired, if they are restricted securities). However, it would also confirm an income tax liability for employee shareholders who acquire shares worth more than £2,000 (with tax payable through PAYE and NICs liabilities due, if the shares are readily convertible assets).

We expect draft clauses for Finance Bill 2013 implementing the employee shareholder CGT exemption to be published on 11 December 2012.

For more information about the employee shareholder proposals, see Legal update, Government response to consultation on employee owner (employee shareholder) status. For more information about restricted securities, see Practice note, Restricted securities.

(See HM Treasury Autumn Statement document 2012, paragraphs 1.122, 2.55 and 2.56.)

The 2012 Autumn Statement comments that the government's strategy on disguised remuneration "has been effective" and "will continue". HMRC's compliance activity in this area "has brought in a further £200 million from outstanding cases".

This "compliance activity" probably includes settlements under HMRC's settlement opportunity associated with the disguised remuneration legislation, for disputed liabilities arising before it came into force. For more information about disguised remuneration and this settlement opportunity, see Practice note, Disguised remuneration tax legislation (Part 7A of ITEPA 2003): Credit for Part 7A charges in respect of tax paid under settlements in respect of earmarking before 6 April 2011 and Legal update, Employee benefit trust (EBT) settlement opportunity: HMRC FAQs published (detailed update).

(See HM Treasury Autumn Statement document 2012, paragraph 2.102.)

The Chancellor announced that the government will reduce the amount of tax relief available for pensions saving by cutting both the annual allowance and the lifetime allowance available for active members of registered pension schemes:

The measures will be included in the Finance Bill 2013, which will be published in draft on 11 December 2012.

HMRC estimates that 98% of individuals currently approaching retirement have a pension pot worth less than £1.25 million and that 99% of pension savers make annual contributions below £40,000, with the average person contributing around £6,000 a year.

(See HM Treasury Autumn Statement document 2012, paragraphs 1.179, 1.180, 2.57 and 2.58 and HMRC: Autumn Statement, 5 December 2012: Pensions savings: tax relief.)

The government announced that it has decided not to proceed with its proposal to require engaging organisations to deduct tax and NICs from, and account for employer NICs on, payments made to certain "controlling persons". (For the proposal, see PLC Tax, Legal update, HMRC consults on disapplying IR35 for controlling persons.) However, amendments will be made to the IR35 rules (as to which, see PLC Tax, Practice note, IR35) so that they apply to office holders. The government promises to keep this area under review.

(See HM Treasury Autumn Statement document 2012, paragraph 2.103.)

The government announced that it will ask the Office of Tax Simplification (OTS) to carry out a review of ways to simplify the taxation of employee benefits and expenses and termination payments. This will include an initial scoping exercise to identify the most complex areas for taxpayers. (A number of such areas have been highlighted by the working groups established to consider the integration of tax and NICs: see PLC Tax, Practice note, Tax and NICs integration: working group discussions.) The OTS will provide details shortly.

(See HM Treasury Autumn Statement document 2012, paragraph 2.96.)