Following the reduction in Capital Gains Tax Relief (CGT) for Employee Ownership Trusts (EOTs) announced in the Autumn Budget, this week we’ve had productive meetings with HMRC and the Department for Business and Trade.
We consulted with our supporter members, Specialist Advisers, and affiliate members to identify the key issues which were identified as:
- Clarity on how Capital Gains Tax is paid
- What happens if a business doesn’t perform as well as expected?
- Is the four-year clawback period still reasonable given the tax relief is reduced?
Our Chief Executive James de le Vingne and International Ambassador Graeme Nuttall met with HMRC and had a very positive conversation around the need for clear guidance (point 1).
We hope this will give any businesses mid-transition or considering employee ownership the assurance that CGT can be paid in instalments and linked to the payment schedule (covering point 2).
“HMRC has been highly responsive and supportive of our need to quickly provide the employee ownership sector with answers to the concerns and questions raised by professional advisers and affiliate members,” said James.
“We’re grateful to our EO community who proactively shared their lived experience to help us shape the priorities to take to our meetings with senior government teams.”
An adjustment to the four-year clawback period would require a change to legislation and is, therefore, an issue for HM Treasury. Our meeting with the Director for Personal Tax, Pensions, Tax Administration & HMRC Spending - originally scheduled for 18th December - has been pushed back to the New Year, due to unexpected illness. However, this is one of several key issues we’ll raise on behalf of our members and the wider EO sector.
Earlier this week, James also met with Blair McDougall, Minister for Small Business and Enterprise, who reiterated the government’s commitment to double the Co-operative and Mutual economy (which includes EO). He outlined concerns from members - including some currently planning an EOT transition - to raise awareness of some of the barriers facing the sector following the tax changes.
Our opportunity here is through submitting a formal response to the Department for Business and Trade’s Call for Evidence, which we shared with members last week.
We’re drafting our submission which we’ll share with members in January. In the meantime, share your experiences of transitioning to EO, what support was available, what barriers or challenges you faced, and what support you feel would help the sector to grow. Simply reply to the discussion over in the eo Hub.
We’ll keep you updated over the coming weeks.