Company ownership is the first of the non-monetary rewards that we investigated in our report. The employee-owned business sector in the UK is growing because employee-ownership is proving to be a durable and successful business model. The combined impact of the COVID-19 pandemic and the anticipated rise in UK capital gains tax resulted in a substantial spike in the number of shareholders looking to sell their respective companies in the 2020/21 tax year – and an employee-owned structure is a highly beneficial route to consider for high-growth companies.
Employees in employee-owned businesses tend to be more entrepreneurial and committed to the company and its success and employee-owned businesses tend to be better at recruiting and retaining talented, committed staff.
Employee Ownership Trusts
An Employee Ownership Trust (“EOT”) is a special form of employee benefit trust introduced by the Government in September 2014 to encourage more shareholders to set up a corporate structure like the John Lewis model.
The incentive for owners is that the Government introduced very generous tax breaks to encourage shareholders to move to an employee-ownership model. However, to qualify for the tax incentives, the employee ownership needs to be structured in a particular way.
“Becoming employee owned reflects the people-first entrepreneurial spirit that has been the backbone of HJA since 1977. It provides continuity for our partners and staff, and therefore our clients. It is the perfect model for a firm like ours.”
Patrick Allen, Senior Partner, Hodge Jones & Allen LLP
"The collective ownership by all of the team secures the future of our business and our core values, meaning we can long outlast the founders and senior team without the threat of a takeover or sale that could result in a dramatic change in business culture".
Tony Iles (Chairman and MD), Tonic Construction Ltd
Other employee ownership structures
There are a range of other share and incentive plans that can be used to achieve the same benefits for your business and employees. Read our full breakdown of each structure and how it could work for you.
Which Share Plan is right for your business?
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