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Employee Ownership

Greater employee engagement,
and performance.
Group of professionals looking at laptop

Employee Ownership

If you’re considering employee ownership, you’re in good company. Aardman Animations, Riverford Organics, Wildlife World and Lush are among the successful businesses to have embraced this increasingly popular model of ownership.

Last year, the employee-owned sector grew by a record 40%. It’s a trend driven by the fact that giving staff a stake in the company can enable founders or owners to:

Exit the business while preserving its culture
Grow the business by attracting, retaining and motivating staff
Start a new venture

Why become

Employee-owned businesses achieve higher productivity, are more resilient to economic downturns and have more engaged workforces. According to the latest Employee Ownership Top 50 report, they typically enjoy:

Stronger sales – up 5.1%, compared to a UK average of 1.2%
Better productivity – up 1.7%, compared to a 0.9% fall overall

And as accountants, it would be remiss of us not to point out the tax advantages of employee ownership for both exiting owners and employees, not least the chance for a completely tax free sale (provided relevant conditions are met and the valuation is accepted by HMRC).

Different types of employee ownership

There are three main forms of employee ownership:

Individual share ownership – employees hold shares
Trust ownership – company shares are held on behalf of employees as a whole in a trust
A hybrid model combining trust and individual ownership

Each has its advantages and potential disadvantages, depending on what you want to achieve. We can help explore each of these routes to determine which would suit you best.

Staff image from different industries

Could employee ownership
be right for me?

Employee ownership could be a good solution if you want to:

Plan an orderly succession and get market value for your business
Benefit from tax breaks, in particular 0% rate of Capital Gains Tax for you
A tax-free bonus of up to £3,600 every year for your employees
Manage the timing of your exit to suit you and the business
Secure the future of your business and protect its existing culture
Maintain jobs in the community and preserve existing supplier relationships
Reward your employees for their loyal service

Get Started

We know there’s a lot to think about and it’s a big step to take. We can make it easier by talking through all the options so you can decide if employee ownership is the right step for you. To find out more and discuss if it’s right for you, please contact one of our experts.

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