The trade body for co-operatives is calling for worker co-op buyouts to enjoy the same tax breaks as employee ownership trust (EOT) buyouts.
Thousands of jobs could be saved and millions of pounds saved if government offered a tax relief for worker buyouts, according to Co-operatives UK.
The trade body for co-operatives is calling on government to widen a tax break to include worker co-ops ahead of the Spring Budget announcement. The tax relief is currently only afforded to employee ownership trusts (EOTs).
Co-operatives UK Policy Lead, James Wright, said: "At a time when hundreds of thousands of potentially viable jobs are at risk because of business closure, transitions to worker ownership offer a proven way to sustain jobs through resilient, productive and socially just enterprises.
"We need to ensure workers and businesses have more good options open to them. This requires government to end damaging distortions in tax law that currently limit these options."
Co-operatives UK's submission to government includes valuable input from workers.coop, the worker co-op federal. It calls for small tweaks to existing tax reliefs. Those small tweaks will deliver big gains with:
- Workers and businesses given more choice for transitioning a business and/or saving jobs
- Workers and business provided with a simpler, lower cost option, which could save transitioning businesses between £7m and £46m, cumulatively, over three years, in legal and other associated costs
- Workers benefiting from a more attractive option that gives them more direct, democratic control of their business
- Workers enjoying an option that is simple, transparent and democratic, and so inherently low risk from a tax avoidance perspective
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Benefits of including worker co-op buyouts in the tax relief would be wide-ranging and include:
- Thousands more jobs saved every year through worker ownership transitions
- The costs involved for workers and businesses reduced by millions of pounds each year
- More workers and SMEs would experience the economic and social benefits of democratic worker ownership and control