Up Front

Counting sheep over London Bridge

Transporting sheep across London Bridge might seem a thing of the dim and distant past – but far from it.

Along-held annual

tradition sees Freemen of the City bring sheep to market, toll free, over the Thames.

This year’s charitable Sheep Drive and Livery Fair once again honoured tradition and celebrated the longestablished right afforded to Freemen. Led by the Rt Hon Lord Mayor, Vincent Keaveny, and the Worshipful Company of Woolmen, the sheep were taken to the square near Monument on the north side of the river to the Livery Fair – which offered visitors the opportunity to learn all about the Sheep Drive and the worthy causes it supports. The Sheep Drive and Livery Fair showcases the important enduring contribution of London’s livery companies, from the formation of the City of London in years gone by, through to modern times – both in terms of the creation of new, sustainable trades and the important charities supported.

Southwark councillor presses new PM on free school meals

In early September, Cllr Jasmine Ali, Southwark Council’s Deputy Leader and Cabinet Member for Children, Young People and Education spoke at a National Education Union (NEU) event in the House of Commons on Free School Meals.

The event was chaired by

Kim Johnson MP and Cllr Ali was joined on the panel by speakers from End Child Poverty, Z2K and the Child Poverty Action Group.

As part of the NEU’s No Child Left Behind campaign, they are asking the new Prime Minister Liz Truss to provide Free School Meals for every primary school child. Cllr Ali spoke about the benefits of a nutritious lunchtime meal for children, both for their health and their ability to concentrate on their learning. She noted that means testing free school meals often ‘singles out the most disadvantaged children’ and that ‘when prices are rising, means testing is like trying to hit a moving target. Families that were coping yesterday cannot cope today.’ Cllr Ali rounded off her speech by pledging her support for the NEU’s campaign and an amendment that Kim Johnson MP is looking to table to the Schools’ Bill on extending Free School Meals, highlighting that both Scotland and Wales have committed to extending Free School Meals to every child in primary education.

Football fans come together to aid cancer charity

South London football fans came together on Sunday 25th September as Prostate Cancer UK’s 2022 Football March concluded in the capital.

The men’s health charity

visited football grounds and iconic venues across the nation and welcomed fans on the 26.2-mile walk across London.

Walkers had kicked off the event in Greater Manchester on Thursday, and moved to the South Coast a day later, and the West Midlands on Saturday. Supporters marched from AFC Wimbledon’s Cherry Red Records Stadium to The Den, home of Millwall FC – a long-time charity partner and the first club to wear the Prostate Cancer UK logo on their shirts, in 2013/14. The marchers also stopped off at Premier League duo Brentford and Fulham, as well as another of the charity’s partner clubs, Queens Park Rangers, enroute.

£250k raised for King’s College Hospital brain tumour research

King’s College Hospital, in Denmark Hill, has reached a donation milestone in efforts to support vital research into brain tumours in children and young adults.

Atotal of £250,000 has

now been raised by the family of a young patient who sadly lost her battle against an aggressive brain tumour.

Charlotte Eades was 16 when she was diagnosed with a glioblastoma multiforme, a fast-growing and rare form of brain cancer. During her illness, Charlotte fought to raise awareness of cancer in young people and kept a video blog to document her life with the condition. The charity, Charlotte’s BAG, raises money for research into the condition to help other children, teenagers and young adults with the condition. Charlotte was just 19 when she died in 2016, but fundraising continued and the amount the charity has donated has increased over time and been used to develop a laboratory dedicated to the study of genome sequencing of children with brain tumours.

New affordable homes set to boost local economy

New affordable homes at Zone L Doorstep green spaces at Zone L New council homes at Plot K1, due to be completed next year

As the scorching summer of 2022 closes, plans for hundreds of new homes in Canada Water to meet local housing need are starting to take shape. This in turn provides a range of benefits for existing businesses, who reap the rewards from a new diverse community on the doorstep. A recent study from the research and policy institute

Centre for Cities* highlighted how important diverse

communities are for creating the conditions for local economies to thrive. The report demonstrates the link between housing supply keeping up with local demand and neighbourhoods retaining their appeal as somewhere people want to live, work and spend time and money in. This is a key consideration in Canada Water, so that the development comes forward in a way that meets local demand in Rotherhithe and Surrey Docks, supporting the local neighbourhood to thrive and grow with the development. The Canada Water development is redeveloping Surrey Quays Shopping Centre, Surrey Quays Leisure Park and the Printworks to provide a new town centre for the borough. It is being brought forward by British Land in partnership with Southwark Council, as a 50/50 joint venture with pension fund AustralianSuper.

New affordable homes

In July, Southwark Council approved plans for further new homes within the Canada Water development. This is an exciting milestone, as it opens the door for British Land to continue to help meeting the pressing need for new homes in the area. Zone F, located across a portion of Surrey Quays Leisure Park, will provide around 400 new homes along with workspace, shops and restaurants. Zone L, which will be located near to the Printworks site, will deliver a further 237 new homes, of which 60% will be social rent, 25% market rent, and a further 15% intermediate tenure. Both will feature plenty of public space for people to enjoy, such as roof terraces, open courtyards, new tree planting and a variety of play areas. Over at what is known as Plot K1, on Roberts Close and close to Russia Dock Woodland, the construction of 79 new homes is advancing well, with the building expected to be finished next year. The development will be taken on by Southwark Council, providing 60 new council homes and plenty of homes with two or more bedrooms, making them suitable for families. This is just the tip of the iceberg. Of the approximate 3,000 new net zero homes delivered across the whole development, at least 25% will be social rent and the rest intermediate.

Community at its core

Building a place that is at the heart of its community and connects local people to the opportunities it will deliver is at the core of what the Canada Water development means. So including local people and businesses is key. With British Land’s commitment to deliver quality career progression and support businesses with access to opportunities for growth, such as Thrive, a low-cost workspace programme and support hub, the whole community can help shape and share in the development’s success.

As London’s first new town centre in 50 years, the Canada Water development aims to support local people and businesses to grow so that they are best placed to benefit from the opportunities that the development will bring. With new affordable housing that meets the needs of the community, plus more jobs and facilities with sustainability at their heart, British Land is committed to a development that works with and for the community.

How the Employee Ownership Trust Offers the Ideal Exit Strategy at ZERO Tax

David Craddock is a recognised authority in the UK and worldwide on employee share schemes and the author of Tolley’s Guide to Employee Share Schemes. In this article, David identifies the role that the Employee Ownership Trust (EOT) can fulfil in facilitating the ideal tax-efficient and cost-effective exit strategy as an alternative to a trade sale or an initial public offering.

The Latest Triumph for Employee Ownership

The initiative to introduce the EOT through Schedule 37 of Finance Act 2014 emerged from the Coalition Government as the single most significant triumph in the development of employee ownership since Enterprise Management Incentives (EMI) and the Share Incentive Plan (SIP) were introduced by New Labour in 2000. Unlike EMI and the SIP, which deliver direct employee share ownership to individual employees, the EOT offers indirect employee share ownership. The unique feature of the EOT is that the sponsoring company’s shares are held in a discretionary trust as a collective arrangement for the long-term benefit of the company’s total workforce in stabilising the company’s ownership structure and securing its independence. Although different in kind from EMI and the SIP, either of these two scheme arrangements can, if the company so chooses, operate alongside the EOT and offer direct employee share ownership to complement the collective ownership by the EOT. Notably, the grant of EMI options to senior employees, properly implemented and communicated, can act as a motivational empowerment for executives, thereby ensuring that the shareholder succession is matched by a management succession that is so essential for a successful exit. Nevertheless, the EOT can operate without any accompanying tax-advantaged (tax-approved) employee share schemes, and still offer, courtesy of its own 2014 legislation, if the company so decrees, tax-free bonuses to its employees.

The Headline Capital Gains Tax Exemption: ZERO Tax Charge for the Selling Shareholders

Under Section 236M, TCGA 1992, the Controlling Interest Requirement secures a complete exemption from capital gains tax for the seller of the shares for the sale of the 51% (or more, up to 100%) controlling share interest to the EOT in a defined single tax year. This exemption is available for persons who are not companies. Provided the statutory requirements are met, notably that the shares are in a trading company or the parent company of a trading group, then the capital gains tax exemption is available to an unlimited extent. The fact that the exemption is unlimited is a particularly attractive feature, even if the seller has access to Business Asset Disposal Relief, for the simple reason that the sale of shares to the EOT attracts zero capital gains tax on an unlimited amount of value.

The Income Tax Exemption for Qualifying Bonus Payments to Employees

Chapter 10A within Part 4 of ITEPA 2003, introduced as a new EOT insertion, is devoted to the rules for the tax-free status which accord to qualifying bonus payments to employees. The tax-free status is given as an exemption from income tax for up to £3,600 for each employee in any given tax year, operated for all employees on a same-terms basis. Although it is the establishment of the EOT that provides the opportunity for the company to introduce qualifying bonus payments, it is the company that pays the qualifying bonus payments to the employees and not the EOT trustees.

The Deferred Consideration

The Sale and Purchase Agreement for the sale of the shares is between the existing shareholders and the EOT trustees acting on behalf of the EOT. Although the company is not a party to this agreement, it is the company that funds the EOT through an arrangement that must be non-binding in order to ensure that monies received by the EOT from the company are not subject to income tax. The whole of the sale proceeds, linked to the whole company value, will be paid to the existing shareholders immediately following the sale if the EOT has the available funds, albeit supplied by the company. Alternatively, though, the sale proceeds may be paid as a series of deferred consideration payments over whatever time-period is manageable for the company to fund the EOT. Given that the deferred consideration does not have to appear on the balance sheet, the creditworthy status of the company is protected in the eyes of the business community. This piecemeal payment profile is an appealing feature for a company that, at the actual date of the sale transaction, does not have the full amount of the available cash to fund the EOT.

The Growing Popularity

Since 2014, some 550 companies have taken the EOT route to a company sale. The ownership by the EOT of the shares of the company in perpetuity stabilizes the independence of the company and reinforces the employees’ confidence of continuing employment. In a consultation on exit, as well as discussing the advantages of the EOT, discussion should also be given to the Employee Share Trust (“EST”) which allows a more gradual sale approach over several years. The capital gains tax rate for the sale of shares to the EST (as distinct from the EOT) is the Business Asset Disposal Relief rate of 10%.

❛❛ David Craddock has been advising on employee share schemes and employee share trust arrangements for over 35 years. As well as Founder and CEO of David Craddock Consultancy Services, David is a member of the Steering Committee of The ESOP Centre, the Educational Director of The ESOP Institute and the Technical Secretary of the small group of practitioners that meets quarterly with HMRC to discuss the interaction between employee share schemes and share valuation. ❜❜

David Craddock welcomes an opportunity to discuss with you your interest in the Employee Ownership Trust idea and initiative Please feel free to contact David at: T: 01782 519925 • M: 07831 572615 E-mail: D.Craddock@dcconsultancyservices.com • Visit: www.davidcraddock.com DAVID CRADDOCK CONSULTANCY SERVICES • Expertise and Experience •

Specialist in Employee Share Ownership and Reward Management, Share Valuation, Management Buyouts, Employee Ownership Trusts (EOTs) and Investment Education