Chancellor Rachel Reeves has decided to cut employee ownership trust capital gains tax relief from 100% to 50%.
She has justified this because the scheme has been too popular: it is on course to cost 拢2bn in lost tax revenue, she said, which is 20 times beyond the original costings when the scheme was introduced in 2013.
Construction companies that have been sold to an employee ownership trust this year alone include Gilbert-Ash, Conlon Group, Cheetham Hill Construction and Martin-Brooks Roofing.
Reeves said that reduced capital gains tax relief on disposals to employee ownership trusts would save the Treasury 拢900m a year.
The bulk of savings in the government's autumn 2025 budget come from freezing tax thresholds on personal tax and employer National Insurance contributions thresholds for three years from 2028/29. This will raise 拢8bn because, as pay level rises, more people start paying 20% tax (at 拢12,570 annual earnings), and more people will come into the 40% bracket (earning above 拢50,271 and the 45% bracket (above 拢125,140) 鈥� an effect known as fiscal drag.
聽Salary-sacrificed pensions contributions will now be taxed, raising 拢4.7bn, and there will be a 2-point increase on taxes on dividends, property and savings income, raising 拢2.1bn.
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