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A GP practice in Somerset has become the first in the country to convert to an employee-owned trust. This will give all staff, not just the doctors, a role in decision-making.
A spokesperson for Minehead Medical Centre told GP Magazine that the partners wanted to give staff more control. “We also wanted to ensure that the business structure shouldn’t rely on individuals holding shares that could be difficult to transfer if people wanted to leave – hence the idea of becoming an employee-owned trust.”
The practice has struggled with staff recruitment and it’s hoped the trust model will make the practice more attractive for new and existing staff looking to develop their careers.
What is an employee-ownership trust?
The Government introduced Employee Ownership Trusts (EOTs) in 2014 to promote employee ownership. Tax is a major incentive for business owners. Selling shares to an EOT is free from Capital Gains Tax. The EOT structure does not involve direct share ownership by employees. Instead, an all-employee trust holds a controlling interest.
The Partners at Minehead Medical Practice would have needed to divest themselves of more than 50% of their stake in the business. In doing so, they will have lost control and become salaried.
In conjunction with converting to an EOT, the practice also incorporated becoming a limited liability company. This is something that GP practices cannot do without the consent of their commissioning body. According to NHS Somerset, their consent to the incorporation as an employee-owned trust followed a robust and thorough evaluation.
Incorporation without a simultaneous conversion to an EOT is unlikely to appeal to most GP practices. That’s because the partners are still likely to be liable to the bank. They may also have liability to a landlord if they rent the practice premises.
Another consideration is making certain that the shares in the company are held in such a way that the practice continues to be eligible to hold a GMS/PMS contract. And ensuring continued participation in the NHS Pension scheme is another vital factor.