UK Employee-Owned Firms Call For End To Tax Discrimination

by Jason Gorringe, Tax-News.com, London

04 December 2001

Job Ownership, an independent body which reasearches and promotes employee ownership has established a taskforce in order to tackle tax discrimination against employee-owned firms.

The taskforce, which is headed by the international engineering group Arup, and includes high street retailers such as the John Lewis partnership, and other mutuals and co-operative firms, has called for the government to end tax discrimination against workers in employee-owned firms, who are unable to take advantage of the tax benefits afforded by the All Employee Share Ownership Plan (AESOP) to employees of conventional firms limited by shares.

AESOPs were introduced by Chancellor Gordon Brown in the Finance Act 2000, and allow employees to buy company shares with tax free earnings, and to receive the benefits tax-free for five years after leaving the plan. However, workers in employee-owned firms are not covered by these provisions.

Special shares have been suggested as a possible solution, but this would almost certainly necessitate a change in the law.

The Arup chief, Sir Duncan Michael, recently explained the motivation behind the taskforce: 'We are seeking equitable treatment in the labour market. We are determined to ensure our Labour government recognises the huge potential for efficient wealth creation we represent and ends this accidental discrimination against us.'

Recent reports have revealed that the work of the Job Ownership Special Share Taskforce is expected to be reflected in a Private Members Bill on the issue, to be published before Christmas.

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