EOA Briefs Chief Secretary on Incentivisation of Employee Ownership

The Employee Ownership Associationn has led a delegation of members in briefing the Chief Secretary to the Treasury about the benefits of employee ownership.

Welcoming recent interest and support for co-ownership from the Coalition Government, the delegation outlined the value of employee owned businesses to the economy and the importance of employee ownership as a driver of medium term growth and long term sustainability.

Members clearly attributed the fairness and transparency of co-ownership as being key to achieving higher rates of productivity and innovation and successful and sustainable growth. All whilst improving the health and wellbeing of employees against comparable, traditionally owned, organisations.

Calling on Ministers to level the playing field for existing employee owned businesses, the delegation outlined a series of measures to establish parity of taxation and relief for employee investors in enterprises where all employees are able to participate in majority ownership of that enterprise directly, or indirectly via Trust ownership.

Working toward a long term goal of incentivising and growing employee ownership, there are a number of relatively cost-neutral measures which would produce a step change in the number of companies in employee ownership. Key measures include:

Incentivising business sales to employees – using tools such as Capital Gains Tax relief to business owners creating co-owned businesses;

Encouraging and supporting employee owned business models – better defining Employee Benefits Trusts and supporting the reintroduction of Corporation Tax Relief to verified EBTs;

Introducing fair and equitable reward for employee owners – allowing employees the benefits of tax advantaged share-based rewards in the way external shareholders benefit, and modifying devices such as the Executive Share Option, Share Incentive Plans, and Entrepreneur’s to level the playing field for individuals in co-owned businesses.

Work is ongoing in this area, and we will continue to support Ministers in their exploration of employee ownership and what can be done to support and develop co-owned business. 

The delegation included: Parfetts, Gripple, Make Architects, Prospects, John Lewis Partnership, Baxi Partnership,