Potential tax reliefs for ‘John Lewis’ businesses
The Treasury launches a consultation on possible tax reliefs for companies using an employee-ownership structure
A CONSULTATION PROCESS is underway on tax reliefs designed to encourage the creation of ‘John Lewis-style’ businesses.
Two reliefs are proposed; a 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.
The Nuttall Review of Employee Ownership in 2012 suggested that employee-owned companies can provide numerous benefits to the economy, including faster job creation, resilience during the economic downturn and increased commitment from staff.
Following the review, the government announced at Budget 2013 that it will provide £50 million annually, from 2014/15, to support employee ownership models.
Unlike a previously well-publicised sheme, the current proposals would not see employees cede their statutory rights.
Announcing the latest consultation, chief secretary to the Treasury Danny Alexander (picutured) 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 success and this business model will also add greater diversity to our economy.”