Employee Ownership Trusts (EOTs)

Preserve Your Business Legacy and Empower Your Employees

We help business owners transition to employee ownership through Employee Ownership Trusts (EOTs), a model that preserves your company’s values, rewards your employees, and provides you with significant tax advantages. Our team offers practical, strategic, and legal guidance you need to make your transition a success.

What is an Employee Ownership Trust?

An Employee Ownership Trust (EOT) is a trust set up to acquire and hold shares in a company for the benefit of its employees, creating an indirect employee-owned business. Introduced by the UK government in 2014, EOTs have become an increasingly popular choice for owners wishing to secure the future of their company while rewarding their workforce.

Under an EOT, employees benefit from the company’s success — through improved job security, tax-free annual bonuses (currently up to £3,600), and a voice in the business — without holding shares directly. Meanwhile, selling shareholders can benefit from 100% Capital Gains Tax relief on the sale of their shares, provided qualifying conditions are met.

Why Choose an EOT?

Transitioning to an EOT offers a range of benefits for everyone involved:

For Business Owners:

• Tax Relief: Full exemption from Capital Gains Tax on the sale of shares to an EOT.
• Fair Value: Achieve a fair price for your shares without the need for a third-party buyer.
• Continuity: Preserve the culture, values, and independence of your business.
• Flexible Exit: Option to remain involved in the business after the sale and oversee a phased transition.

For Employees:

• Ownership Rewards: Share in the success of the business through tax-free bonuses.
• Job Security: Greater continuity compared to a trade sale.
• Engagement & Morale: Increased motivation, loyalty, and productivity.

For the Company:

• Stability: Retain independence and protect against unwanted takeovers.
• Recruitment & Retention: Differentiate yourself as an employer of choice.
• Performance: Evidence shows employee-owned businesses are more resilient and productive.

Our Services: Guiding You Through the EOT Journey

We provide a complete, end-to-end legal service tailored to your business, ensuring that your EOT is structured properly, tax-efficient, and compliant with all legal requirements. Our approach includes:

• Assessing whether an EOT is right for you, considering your objectives, company structure, and funding options.
• Advising on and obtaining HMRC tax clearances.
• Working with your accountants and valuation experts to agree on a fair market price for your shares.
• Structuring and drafting all legal documents, including the Share Purchase Agreement, funding arrangements, and trust documentation.
• Advising on the appointment of trustees and whether to establish an employee council or engagement committee.
• Supporting employee communication and engagement throughout the process.
• Advising on post-completion arrangements, including employee share schemes and bonus structures.
• Continuing support for trustees and management to ensure ongoing compliance and best practice.

We also provide guidance on alternative structures if an EOT is not the most suitable option for your circumstances.

Who We Help

We act for:

• Business owners planning their exit.
• Management teams preparing for the responsibilities of running an employee-owned business.
• Trustees and employees adjusting to their new roles.
• Accountants and tax advisers seeking specialist legal support for their clients.

Whether you’re exploring employee ownership for the first time or need advice post-transition, we are here to help.

Get in Touch

If you are considering selling your business to an Employee Ownership Trust or would like to discuss whether employee ownership is right for you, contact our specialist EOT solicitors today for an initial conversation.

Contact us:

• Email: wewillhelp@jonathanlea.net
• Phone: +44 1444 708640
• Make an enquiry online