26 September 2013 is the deadline for replying to HM Treasury's consultation on the two new tax exemptions for employee trust owned companies.
As announced on 4 July 2013, “Following the findings of the Nuttall Review and in order to support this sector, the Government has decided to introduce two tax reliefs to encourage, promote and support indirect employee ownership.”
Successive UK Governments have used tax reliefs to encourage the direct ownership of shares by employees. The HM Treasury consultation, “Supporting the employee ownership sector”, outlines the Government’s support for an alternative form of employee ownership, namely, the employee trust (or indirect) ownership of shares on behalf of employees.
The exemptions, which are expected to apply from April 2014, are:
(1) a new capital gains tax relief on the disposal of a controlling interest in a business into an indirect employee ownership structure; and
(2) an income tax and national insurance contributions (“NICs“) exemption to allow indirectly employee owned companies to pay their employees a certain amount per annum, free of income tax and NICs.
There is a short article on our tax deductions blog and a longer article by Graeme Nuttall and Jennifer Martin in Company Secretary’s Review (28 August 2013) that explains more about these proposals, the background to them and the HM Treasury consultation.
This consultation provides a tremendous opportunity to influence the growth of this form of employee ownership. The responses to the HM Treasury consultation will help design these two important new tax exemptions.
Anyone who has not yet contributed to the consultation must act now. Responses to the consultation must be in by 26 September 2013. Email responses to HM Treasury to say you support these proposals will be appreciated, as well as detailed responses.
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