The Government is committed to supporting employee ownership and encouraging its use more widely in UK business and a consultation process is now underway on tax reliefs designed to encourage the creation of “John Lewis” style businesses.
Following the independent Nuttall Review of Employee Ownership in 2012 which concluded that companies with employee ownership produce numerous benefits to the economy, the government announced at Budget 2013 that it will provide £50 million from 2014/15 to support employee ownership models in order to incentivise growth.
There have been two reliefs proposed, one being capital gains tax relief which will allow entrepreneurs to sell their businesses to their employees, rather than to external buyers. The second will mean employers would be able to pay bonuses free of income tax and national insurance.
At the latest consultation, Danny Alexander, Chief Secretary to the Treasury said “We want to encourage greater use of employee ownership in UK businesses and want to ensure that we provide reliefs that are supportive and effective.”
“The employee ownership sector has huge potential and the government wants to support it as much as possible. Employee ownership is of significant benefit to the wider economy, through increased growth and business succes and this business model will also add greater diversity to our economy.”