An increasing number of business owners are considering exiting their business through an Employee Ownership Trust (EOT), alongside a trade sale, a Management Buyout and other exit options.
The number of EOTs in the UK has increased significantly over the past ten years or so since the UK Government introduced EOTs through the Finance Act 2014, with the aim of encouraging indirect employee ownership; a structure similar to that of the John Lewis model.
Since then, the concept has been adopted by many businesses with some notable South West examples being Aardman Animations (2018), Riverford Organic Farmers (2018), Richer Sounds (2019), Go Ape (2021) and Parsons Bakery (2025).
A sale to an EOT allows owners to:
- Benefit from a Capital Gains Tax rate of 0% if certain conditions are met.
- Protect the business legacy, local jobs and empower employees by providing them with more influence over the future of the business as well as the potential to receive annual bonuses of up to £3,600 can be free from income tax.
These potential savings are becoming more valuable given the increases in the main rate of Capital Gains Tax and the changes in Business Asset Disposal relief.
Making an EOT transaction successful requires both technical expertise and experience in such transactions to be able to help with employee engagement which is crucial in maintaining the future success of the business. We recommend that you consider talking to:
- Corporate finance advisors who have experience of working with and valuing businesses that may be sold to an EOT.
- Lawyers and tax specialists who specialise in EOTs.
We are happy to have an early stage discussion if you are considering an EOT as an exit option.
