If you are thinking about selling your business but questioning the best way to meet your goals, an Employee Ownership Trust (EOT) could be the answer. Selling to an EOT is an increasingly popular option for business owners looking for an effective succession strategy. Many owners are attracted by the 0% Capital Gains Tax relief, but the benefits extend far beyond tax.
Selling to an EOT can offer a smooth transition for both owners and employees, reducing complexity and ensuring continuity. An EOT allows you to sell your business at full commercial value, on your timeline, while protecting your legacy and empowering your employees, and also provides significant tax advantages that make it an attractive choice.
An EOT is a special type of employee benefit trust set up to hold a controlling stake in a company on behalf of its employees. The trust holds shares for the benefit of employees, ensuring that ownership and control are maintained collectively. Instead of selling to a trade buyer or private equity, you sell to a trust that safeguards the business for the long term.
Employee ownership trusts (EOTs) were established as a government initiative in the UK to promote employee ownership and facilitate tax-efficient business transfers. The EOT structure is distinct from other employee ownership structures and business models, such as direct share ownership or other forms of employee benefit trusts. EOTs are a popular employee ownership structure and business model for succession planning, offering significant tax advantages and supporting long-term business stability.
Overall, choosing an EOT provides substantial benefit to both the company and its employees.
We specialise in helping business owners transition successfully to Employee Ownership. Our consultants provide:
Every business is different, and an EOT may or may not be the best fit. We will take the time to understand your aspirations and walk you through the process clearly, ensuring you have confidence in your decision.
Book a Free Consultation Today
Find out if an Employee Ownership Trust could work for your business and how you can sell at full value, pay 0% Capital Gains Tax, and secure your company’s future.
Technically, yes, an Employee Ownership Trust itself cannot be sold, but the trading company it owns could sell its shares. However, in practice, resales are extremely rare due to several key factors:
In reality: With nearly 2,000 employee-owned businesses in the UK, very few have ever been resold. The model is designed for long-term sustainability, not short-term exit.
Employee-owned businesses are built to:
Conclusion: An EOT is not about resale, it is about building a resilient, people-focused business that grows and rewards employees over the long term.
A detailed review of your company structure, ownership, and business objectives determines whether an Employee Ownership Trust is suitable for your succession plans.
By reviewing Capital Gains Tax relief eligibility, corporation tax considerations, and employee benefit rules, we help structure your transition in line with UK tax legislation.
Customised succession plans establish how company shares transfer to the trust, ensuring employees gain collective ownership while supporting business continuity and long-term growth.
Carefully drafted trust documents define trustee responsibilities, employee benefit arrangements, and decision-making procedures to promote transparency and protect employee interests.
An independent valuation and structured transaction planning help establish a fair market value for company shares and support a compliant transfer to the Employee Ownership Trust.
An Employee Ownership Trust (EOT) is a special type of employee benefit trust established to hold a controlling stake in a company on behalf of its employees. Instead of selling to a third party or private equity, business owners sell their shares to the trust, which safeguards the business model for the long term while fostering employee engagement.
When qualifying conditions are met, selling a controlling interest of a trading company to an EOT can attract a 0% Capital Gains Tax (CGT) rate for the selling shareholders. This government-approved relief is designed to encourage business succession through employee ownership, though strict statutory requirements must be satisfied.
No, employees do not use their own funds to acquire shares. The EOT typically funds the share purchase through a combination of company contributions, future trading profits (used to repay vendor loan notes), and potential external finance, meaning employees face no personal financial risk or capital outlay.
The purchase price is established via an independent professional valuation to ensure the transaction reflects full commercial market value. Sellers are typically paid through an initial cash payment funded by company reserves or external lending, followed by deferred consideration paid over time via vendor loan notes.
The timeline varies depending on company complexity, corporate structuring, and whether formal clearance is sought from HMRC. On average, the end-to-end process—from initial viability assessment and valuation to drafting legal documentation, setting up trustee arrangements, and completing the share transfer—typically takes between three to six months.
