Stakes are low for employees

The UK remains a long way from becoming a “John Lewis economy”, where significant numbers of employees own stakes in the companies they work for, despite the chancellor more than doubling of the enterprise management incentive (EMI) employee share option scheme grant limit to £250,000.

Although there are several high-profile examples of businesses in the UK with significant numbers of employee shareholders, such as Arup and Unipart, there are still only about 100 companies with significant employee ownership schemes.

Gary Davie, corporate partner at legal firm Shakespeares, said the latest changes would provide significant support to employee ownership schemes but said that more changes were needed, such as capital gains tax reliefs for the sale of shares on a transaction.

Businesses considering setting up employee benefit trusts still have to overcome significant hurdles to satisfy HM Revenue & Customs that their actions are being taken for the good of the company and not for tax avoidance purposes, Davie said.