New tax reliefs ‘designed to encourage employee ownership’

July 8, 2013

The Government has launched a consultation on two new tax reliefs designed to promote the creation and growth of employee-owned companies.

The first proposal is a new capital gains tax relief, which aims to encourage individuals to sell their business to their employees rather than external buyers. The relief would apply when the controlling share of a business is sold into an indirect employee ownership structure, where shares are held collectively on behalf of the employees.

The second relief would allow indirectly employee-owned companies to pay their employees a certain amount each year, free of income tax and national insurance contributions (NICs), with an NIC exemption also applying to the employer.

Commenting on the launch of the consultation, Chief Secretary to the Treasury Danny Alexander said, ‘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’.


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