EOT – Employee Ownership Trusts

Selling your business doesn’t have to mean handing it over to a competitor or third party. An Employee Ownership Trust (EOT) offers a compelling alternative, allowing you to sell to your employees while preserving your company’s independence and legacy.

Introduced by the UK Government in the Finance Act 2014, EOTs enable business owners to transfer shares into a trust that holds them on behalf of employees. This structure gives employees a collective stake in the business without requiring direct share ownership, creating long-term stability and engagement.

Why consider an EOT?

• Ease and speed: A straightforward process that that can complete faster than a third-party sale
• Certainty and control: Create your own buyer and control the timing, price and structure of the sale
• Tax Advantages: An effective tax rate of no more than 12%. Sellers benefit from a 50% reduction in Capital Gains Tax on the full amount of the gain on the sale, including on the distribution of excess cash
• Lower costs: Significantly reduced transaction expenses compared to traditional sales
• Preserve independence: Keep your business out of competitor hands and preserve its culture and values
• Employee engagement: Boost employee retention, morale and motivation through shared ownership and tax-free bonuses.

Key criteria

To qualify for an EOT:

• The company must be a trading business or be part of one
• More than 50% of the company’s share capital must be sold to the trust
• All employees must benefit on equal terms after the sale

How can we support you?

We don’t just advise on EOTs, we’ve lived the process. In 2019, we became an EOT-owned business, giving us unique insight into what works and what to avoid.

Our services include:

• An indicative valuation of your business (formal valuation to be done by an independent valuer to avoid the appearance of conflict)
• Comprehensive and tailored transaction structuring advice
• Structuring and raising third-party finance for companies that qualify
• Obtaining HMRC clearance
• Drafting all necessary documentation
• Building an employee ownership culture.
• Implementing tax-advantaged share schemes

We also offer a free and extensive, no-obligation feasibility analysis, illustrating what your transaction would look like to help you decide if an EOT is right for you.