Tax reliefs proposed to aid 'John Lewis-style' businesses
8th July 2013 | News
A consultation process regarding two new proposed tax reliefs is designed to nurture the creation of more 'John Lewis-style' businesses.
The proposed changes include a new capital gains tax relief - which will enable entrepreneurs to sell their businesses to their employees as opposed to external buyers - and another which will allow employers to pay bonuses free of income tax and national insurance.
Following the Nuttall Review of Employee Ownership last year, it was suggested that employee-owned companies can provide numerous benefits to the economy, including faster job creation, resilience during economic downturn and heightened commitment from staff.
Back in March, John Lewis announced a 17 per cent bonus for its staff after reporting a considerable rise in pre-tax profits (15.8 per cent), further cementing the view that employee ownership models should be supported.
Following the recent Nuttall Review, the Government announced in its latest budget that it will provide £50 million annually in order to back such firms, from 2014/15.
Unlike a previously well-publicised scheme, the new proposals would not require employees to cede their statutory rights.
After announcing the latest review of the proposed tax reliefs, Danny Alexander, chief secretary to the Treasury, reiterated the Government is keen to underpin employee-backed businesses.
"We want to encourage greater use of employee ownership in UK businesses and want to ensure that we provide reliefs that are supportive and effective," he 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."
The country now has 150 companies with considerable employee ownership including the John Lewis Partnership; the Employee Ownership Association (EOA) revealed that this figure grew by 10 per cent in 2012.
Image: Elliott Brown