The UK has a range of tax incentives to encourage employee ownership, including the Employee Ownership Trust (“EOT”) introduced in 2014 offering capital gains tax relief for qualifying sales to an EOT and the scope for the Company owned by an EOT to pay tax free bonuses of up to £3,600 per employee per tax year.

The recognition of the value of employee ownership originated in the United States where the fiscal support for similar structures received a boost recently through the introduction of the Promotion and Expansion of Private Employee Ownership Act 2017 (see US ESOPs) extending provisions allowing the deferral of tax on gains on sales to company sponsored ESOPs (Employee Stock Ownership Plans) and relief for 50% of interest incurred on loans to company sponsored ESOPs for the purchase of employer securities.

This demonstrates the international recognition of the importance of employee share schemes and the importance of understanding the incentives both in the UK and abroad for companies operating internationally.

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