‘The Government supports employee ownership as a business model that offers benefits to employers and the wider economy. The Nuttall Review set out recommendations to promote expansion in the number of employee-owned businesses; which were accepted by my colleague Jo Swinson in October this year. The Government will consider further incentives to support the sector, reporting back at Budget 2013.’
Today’s Autumn Statement gives further recognition to the Government’s support for the employee ownership sector. As well as support for employee ownership from the Deputy Prime Minister, the Cabinet Office and the Department for Business, Innovation and Skills ("BIS"), there is now ongoing support for employee ownership from HM Treasury and HM Revenue & Customs.
The Chancellor announced at Budget 2012 that HM Treasury would conduct an internal review examining the role of employee ownership in supporting growth and options to remove barriers, including tax barriers, to its wider take-up. The results of this review could have remained internal but in a welcome move the Autumn Statement reports on the key outcomes and identifies some next steps by HM Treasury and HM Revenue & Customs.
In summary, the key outcomes of HM Treasury's review, as announced today are that:
- employee ownership can bring benefits to individual businesses through increased employee engagement
- there is a real diversity of ownership models adopted by employee-owned businesses
- a key barrier to encouraging wider uptake of the sector – as identified in the Nuttall Review - is lack of awareness of the benefits of the employee ownership model amongst business owners and financial and legal advisers, and
- the majority of businesses who met with HM Treasury did not identify the tax system as a primary barrier to greater uptake of the model
As to next steps:
- the Government has provided, in the Autumn Statement, a timely confirmation, given current concerns over tax avoidance, that employee benefit trusts have a "legitimate" use in employee ownership models, where such trusts are not aimed at avoiding or deferring tax
- the Government is committed to developing a better understanding of the complexities facing the sector, including within the tax environment
- HM Treasury and HM Revenue & Customs will support BIS and the Cabinet Office in implementing the actions set out in the Nuttall Review, including through contributing to the new BIS-led Implementation Group, chaired by Jo Swinson, the Minister for Employment Relations, Consumer and Postal Affairs
- there is a commitment to working with Santander and John Lewis Partnership to develop a forum to promote better access to finance for the sector
- further details will be announced shortly in relation to tax-advantaged employee share plans building on the work of the Office of Tax Simplification, and
- the Government is considering further incentives to support employee ownership and will report at Budget 2013.
A news alert on the FFW web site contains the full text of what is in the Autumn Statement regarding employee ownership - please click here