Employee Stock Ownership Plan (ESOP) - ESOPs in The UK

ESOPs in The UK

John Lewis is often cited as an example of how employee ownership can be effective.

Chancellor of the Exchequer George Osborne announced in a speech at the Conservative Party Conference on 8 October 2012 that the law would be reformed to create a new employment status for "employee-owners". Employee-owners will pay no capital gains tax on any profit made from selling these shares, but will have to give up certain employment rights in return, including redundancy and unfair dismissal. The consultation by BIS was published on 18 October 2012. Lawyers have suggested that the employee-owner scheme could have significant unintended consequences as, under the existing proposal, it may be possible for entrepreneurs to set themselves up as employee owners in order to avoid capital gains tax. In practice, these entrepreneurs will be far more “owner” than “employee” and the employment rights they will be giving up are likely to be of much less value to them than to ordinary employees, and so the tax advantages of far greater value to them than to ordinary employees.