Finance Bill 2014 Confirms Employee Ownership Incentives
Beakbane, one of the world’s leading manufacturers and distributors of machinery protection systems has commended the new tax incentives that come into force on 6th April and are designed to increase the number of employee owned businesses in the UK and local region.
Beakbane, which is a member of the Employee Ownership Association (EOA), the voice of employee owned businesses in the UK, will be celebrating 60 years in business in June this year.
Mike Southwell, Managing Director of Beakbane, commented: “We are pleased with the new measures and delighted that the Government recognises the contribution that EO businesses make to the UK economy. We feel that the changes present real opportunities to our business and the local economy and we at Beakbane will certainly be exploring how to utilise these excellent incentives.”
The eagerly anticipated announcement on employee ownership was initially proposed in last year’s Budget, when an investment of £50m per annum was pledged, later increased to £75m per annum, to support the growth of employee ownership. Last week’s Finance Bill officially confirmed that, as of 6th April 2014, any UK business owner who sells a controlling interest to their employees via an employee ownership Trust, will be given Capital Gains Tax (CGT) relief on the entirety of the proceeds, effectively an exemption.
Additional employee ownership incentives confirmed in the Finance Bill include the fact that from October 2014, bonus payments made to employees of employee owned companies such as the John Lewis Partnership, in which an employee ownership Trust has a controlling interest, will be exempt from income tax up to a cap of £3,600 per employee per annum.
Additionally, there will be an increase in the maximum value of shares that employees can acquire under all employee Share Incentive Plans (SIP) from 6th April 2014. The individual limits will be increased to £3,600 on the ‘free’ shares companies can award to employees and, £1,800 on the ‘partnership’ shares employees can purchase. This will be the first such increase for this tax efficient employee ownership scheme in over a decade and the Bill allows for further adjustments of SIP limits to be made in the future by Treasury Order rather than via a Finance Bill.
The EOA and its Members have campaigned long and hard for all of the employee ownership tax incentives outlined in the Finance Bill. The agreed measures signify real tangible support from Government, with a clear recognition of the contribution that employee owned businesses make to the UK economy, which is already over £30bn each year and equates to approximately 4% of GDP.
Iain Hasdell, chief executive of the EOA, explains: “The EOA is delighted with the new measures and we are proud of the leading role we have played in securing them. Employee owned businesses boast a more engaged and productive workforce and deliver greater levels of productivity, innovation and financial performance. Employee ownership is pivotal to long term economic growth in the UK. These new tax incentives will give business owners, especially those considering succession planning, yet further motivation to change the way they shape their business.”
He added: “The measures announced today provide further backing for the EOA’s target of 10% of UK GDP being delivered by employee owned businesses by 2020.”
Iain Hasdell concludes: “We are very pleased that Government has listened and has now implemented these incentives. We are looking forward to seeing these new measures help the expansion of employee ownership in the UK.”
As the measures were confirmed, the Employee Ownership Association also announced Employee Ownership Day 2014. Following the success of last year’s event, which the EOA founded to celebrate employee owned businesses and recognise the contribution that they make to the UK economy, EO Day 2014 will be held on Friday 4th July and further details will be announced in due course.
Business owners who wish to find out more about employee ownership can contact the EOA on 01482 667122 or firstname.lastname@example.org.
For more information on last week’s Finance Bill, please see: http://bit.ly/QiV1dv.
For more information on the Employee Ownership Association, please see: www.employeeownership.co.uk