The Treasury has published a consultation document on supporting employee-ownership models to incentivise growth, for comment by 26 September 2013.
The independent Nuttall Review of Employee Ownership in 2012 concluded that companies with employee ownership produce a number of economic benefits including resilience during the economic downturn, faster job creation, and higher levels of commitment among staff. In support of this, the government announced at Budget 2013 that it will provide funding for proposals to encourage and support the creation and growth of companies with employee ownership.
Three forms of employee ownership were identified: direct ownership, indirect ownership, and a combination of both.
This consultation focuses on indirect employee ownership structures and sets out proposals for two tax reliefs that the government plans to introduce.
The first is a capital gains tax (CGT) relief on the sale of a controlling interest in a business into an indirect employee ownership structure. The second is an income tax and National Insurance Contribution (NIC) exemption for employees of companies where a significant proportion of the company is owned by a trust whose purpose is to benefit its employees.
Together, these tax reliefs will promote awareness of the sector and increase the attractiveness of indirect employee ownership structures for businesses which might be considering converting.
Prior to introducing the new reliefs, the government, through this consultation, hopes to learn more about the nature and number of existing employee owned companies within an indirect ownership structure and the likely extent of use of the proposed reliefs. The consultation sets out the government's proposals for the qualifying conditions for the proposed CGT relief, and the structure of the income tax and NICs exemptions and who should benefit from them. It also requests views on how the income tax and NICs exemptions can be implemented with minimal complexity for employers.
More details are available from Gov.uk HERE