Ownership Dividend – One year on: partnership focus ICAEW
Back in May our Operations Director Cathy Brown visited the ICAEW (The Institute of Chartered Accountants England and Wales).
It was the 14th of May to be exact, which sticks in our minds as the day Richer Sounds announced its transition to employee ownership and a pay-out for staff – a story which was alive in the media for days with a positive commentary from journalists, business orgs and politicos on its links to a more inclusive economy.
As documented in the Ownership Dividend, one of the barriers to the growth of employee ownership in the UK is awareness and knowledge in the in the advisor market. In particular for EO to grow at the point of succession, accountants need to be able advise on all of the options on the table when a founder or owner is looking to exit the businesses.
With increased awareness of employee ownership over the past year, growth in the number of transitions has started to accelerate: the sector grew by 18.5% in 2018. In particular SMEs and family businesses choosing to move to employee ownership via an Employee Ownership Trust (EOT) has helped power the growth of the sector since it was introduced in Finance Bill 2014.
An EOT allows for complete exemption from Capital Gains Tax on the proceeds of a sale to owners who sell a minimum of 51% of the equity of the business to the EOT. Plus employees can benefit where bonus payments paid via the EOT can be paid tax free to the sum of £3,600 per employee per annum.
This is why the EOA’s work with the ICAEW began back in 2017, first delivering a webinar and some articles.
As well as the ICAEW providing a representative on the Ownership Effect Inquiry panel and being part of the launch of the Ownership Dividend report, work between the two organisations has continued in 2019 with a cover feature in Corporate Financier publication and an agreement for the EOA’s Chief Executive Deb Oxley OBE to deliver keynote address to the ICAEW Annual Reception of the Corporate Finance Faculty in November 2019.
More recently, the ICAEW and EOA are looking at collaborating on some roadshows targeting accountants in the regions later in 2019. This marks a real step forward into increasing the knowledge and capacity to support the growth of the employee owned sector.