The Government has launched a consultation on providing two new tax reliefs worth £50 million to boost and support the creation of employee-owned companies.
The promotion of employee-owned companies, co-operatives and mutuals follows evidence that such business structures lead to greater job creation and are more productive and resilient against economic downturns.
The consultations cover;
A capital gains tax relief: this would apply when the controlling share of a business is sold into an indirect employee ownership structure – enabling entrepreneurs to sell their business to employees as opposed to external buyers
An income tax and national insurance contributions (NICs) exemption: this would allow indirectly employee owned companies to pay their employees a certain amount per annum free of income tax and NICs. There would also be an employer NIC exemption for the company.
The Government announced in Budget 3013 that it will provide £50 million annually from 2014-15 to support employee-ownership models.
Chief secretary to the treasury Danny Alexander said: “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.”
Launched on the first Employee Ownership Day, the first stage of the consultation will run until 26 September with individuals, businesses and business groups encouraged to put forward their views.