Leigh Sayliss, Oliver Corbally
June 2025

With the UK’s biggest socialist festival fast approaching this July, there’s something in the air: a reimagining of how power, profit, and people can coexist.

It got us thinking…

What would it look like to structure a business on socialist principles, without giving up the entrepreneurial spirit that fuels start-ups and scale-ups?

We put our lawyers through a thought experiment: how would you build a business that shares success, supports workers, and still grows fast?

Turns out, you don’t need to throw out capitalism entirely to build a company rooted in fairness. The UK tax system, perhaps surprisingly, offers smart, practical ways for business owners to share the rewards of growth with the people who help build it, without sacrificing financial success.

Here’s how to structure your business with socialist values and make the system work for your team, not just for you.

From Startup to Shared Success

The early days of running a business are tough, ‘cash is king’, and conserving it is critical. One creative way to extend your runway? Share equity with the people who are helping you grow. Giving shares in a new company to the people who work for it can save the company hard earned cash, leaving more of the venture capital funds available to grow and develop the business. 

Issuing shares to key team members early on not only reduces your wage bill, it also aligns their interests with your interests as founding owner. Better still, if your business succeeds, those early shares can turn into a meaningful reward for your team.  Having shares in a business is not as secure as being rewarded with a salary and there is even a risk that the value of the shares may fall – and the tax system recognises this risk, taxing capital gains more lightly than income. Although the worker may be taxed on the value of the shares they receive if you bring them into the business before the business has started to grow, the value of the shares should be low.  Any increase in value will then generally be taxed as a capital gain – giving a lower rate of tax than earnings. 

For those who join later in the game, when your company already has value, growth shares may be more appealing.  These only have value if the company grows, allowing people to benefit from the growth in the business to which they have contributed – with the benefit that they reduce any tax charge when the shares are issued. 

The key is to plan early. Don’t wait until your company’s value has risen; that’s when the tax charges get trickier.

Options That Support the Collective

As your business grows, you can offer share options rather than immediate shares. These let employees buy shares later at a set price – usually the current value – meaning that if the company succeeds and the shares go up in value, the worker can buy them at a discount, but if they go down, the worker doesn’t lose out.

To make this even more effective there are option schemes that allow the benefit of the lower capital gains tax rates when the shares are sold:

  • Use EMI (Enterprise Management Incentives) for maximum tax efficiency, these are tailored for small, fast-growing businesses.
  • Or try CSOP (Company Share Option Plans) which are still tax-advantaged and great for rewarding key team members.

Both schemes are designed for strategic flexibility so you can choose who benefits.

Want Everyone In? Go Egalitarian

There are also schemes designed for all employees, not just a chosen few:

  • SAYE (Save As You Earn) lets workers save monthly and buy shares at a discount after 3 or 5 years.
  • SIPs (Share Incentive Plans) let you gift shares or match employees’ own investments with bonus shares, all in a tax-efficient wrapper.

These can create a culture of collective ownership and long-term thinking, where everyone has skin in the game.

If You Really Want to Go Full Co-op

A business owner can allow workers in the business to acquire shares and have an involvement in the profits of the business – but what about the owner who wants to retire or sell up and hand over the business to the workers?  Well, if you’re inspired by John Lewis, Arup or Mott MacDonald, and you’re thinking long-term legacy, Employee Ownership Trusts (EOTs) might be for you.

Selling your business to your employees via an EOT can:

  • Allow you to sell tax-free (as long as the trust acquires at least 50% of the business).
  • Unlock tax-free bonuses (up to £3,600 a year) for employees going forward.

As a final bonus for the workers who were given EMI Options, they should be able to exercise their options and receive shares (EMI Shares) at a discount.  Even though they will have received the EMI Shares as a benefit of their employment, any gain they make on selling them should be subject to the lower tax rates that apply to capital gains (as against income).

It’s an elegant succession plan for founders who want to retire and leave something meaningful behind for the people who helped them create and grow their business.

Leaving a Legacy: Social Values Beyond the Business

For founders thinking long-term- beyond even their active role in the business- there’s another layer to consider: charitable giving through Wills. Allocating a portion of your estate to causes that align with your values allows you to extend your impact well beyond your lifetime. Not only can this support causes close to your heart, it can also reduce the tax burden on your estate, allowing you to give more both to your beneficiaries and to charity.

Whether you want to leave a specific bequest or dedicate a percentage of your estate to charity, these actions reflect the same values of social responsibility and shared benefit that underpin everything from employee ownership to ethical investing.

Sharing Success Isn’t Just Socialist –  It’s Smart

Founders often fear that “giving away” equity weakens their position. But what if sharing actually strengthens your business?

Workers who own a piece of the company are more motivated, more loyal, and more invested, quite literally, in its success. With the right structure, you’re not handing over control. You’re building a team of mini-founders who want the business to win. 

And yes, it’s possible to do this without bleeding cash, losing your edge, or drowning in tax bills. The UK system, for all its quirks, supports smart, inclusive entrepreneurship.

The Bottom Line

You don’t have to be waving a red flag at a rally to structure your business like a socialist. But if you care about people, equity, and purpose – and you want to build a business that reflects those values – there are real, tangible tools at your disposal.

So this July, while the crowds at the socialist festival debate the future of work and ownership, ask yourself: what kind of business do I want to build?

Because with the right strategy, you don’t have to choose between profit and people. You can have both.  Letting your workers have shares may leave you with a smaller percentage of the equity – but the business is so much larger that everyone wins.

If you’d like to explore how this could work in your business- whether you’re raising funding, building a team, planning your exit or shaping your legacy – do get in touch. At Lawrence Stephens, we’re here to help founders build businesses that reflect who they are, and what they believe in.