Even though tax benefits are not the primary consideration when it comes to employee ownership, recent changes to tax law mean owners and employees may benefit from employee ownership deals.

Employee ownership tax benefits for business owners

It may be possible for some business transformations that involve moving control of the business to an Employee Ownership Trust to access a complete capital gains tax exemption. Business owners considering this should get advice from a qualified accountant or tax expert. 

Employee ownership tax benefits for employees

Employees of a business controlled by an Employee Benefit Trust may be exempt from income tax on some bonus payments. (They will not, however, be exempt from National Insurance contributions.) This creates a simple financial incentive for employees who will gain from the success of their company without the tax implications associated with receiving dividends on shares.

Employee groups adopting this employee ownership approach should also get advice from a qualified accountant or tax expert as part of the transition process.

For a detailed overview of Employee Ownership Trust and their legal requirements, tax incentives and benefits of employee ownership please read this article from Employee Ownership legal expert Graeme Nuttall.

See the HMRC website for more details on employee ownership tax benefits

Would you like to speak to somebody about employee ownership?

Please contact Business Wales by calling 03000 6 03000 and quoting ‘EO2016’ and we will be happy to arrange an informal discussion with one of our Social Business Wales employee ownership experts. Rydym yn croesawu galwadau’n Gymraeg / We welcome calls in Welsh.