If you’re planning your exit, an Employee Ownership Trust (EOT) is an excellent opportunity for the right business. From zero Capital Gains Tax to generous tax-free employee bonuses, it’s clear to see why EOTs are becoming so popular.
An EOT is a special kind of trust set up to hold shares in your company for the benefit of all employees.
Providing you are selling more than 50% of your stake in the business, and meet other conditions (set out below), you and the business will enjoy the following benefits.
Not every business and owner is suitable for an Employee Ownership Trust, and several conditions must be met in order to qualify for the tax benefits of the transaction.
There is a four-year tax recovery period following an EOT transaction. That means the government can claw back any tax from the exiting shareholders up to four years after completion if EOT rules are broken.
Martin Dean FCCA of Gravitate Corporate Finance has a proven track record of facilitating these transactions. He works closely with Luke James, our Tax Director, who will ensure your transaction is optimised for tax too.
Before starting the process, it’s vital to confirm that an Employee Ownership Trust (EOT) is the right option for you. We consider your goals, company culture, and long-term vision to ensure this path supports your legacy and benefits your employees.
A robust, independent valuation is essential. It not only determines the fair value of your business but also provides confidence for you, your employees, and external funders, ensuring transparency and trust throughout the transaction.
The EOT structure must be established correctly from the start. We prepare the trust deed, manage the legal requirements, and make sure the framework is watertight, laying the foundation for a successful transition.
Thorough legal and financial due diligence protects both you and the trust. By identifying risks early, we safeguard the deal and ensure the process runs smoothly without unexpected surprises.
Tax planning is a critical part of the process. We help you understand the implications, minimise risks, and ensure you make the most of any reliefs available, keeping the transaction efficient and compliant.
Funding is at the heart of the EOT’s ability to purchase shares. We structure and secure the right financing, ensuring the trust can meet its obligations without jeopardising the business’s future stability.
Employee ownership is more than a legal transaction; it’s a cultural shift. We support you in delivering clear, positive communication so employees understand the benefits and feel engaged with the new ownership model.
For an EOT to succeed, strong governance is essential. We help design decision-making frameworks, trustee responsibilities, and oversight processes to keep the business sustainable and accountable.
We prepare and review all documentation, making sure everything is accurate, compliant, and properly stored. This ensures you are fully “transaction ready” and avoids delays or complications at the final stages.
There is no one-size-fits all playbook for EOTs, so we strongly recommend a proper conversation about you, your business, and its goals. That way we can ensure this route is right for you, and help make it a reality.
To help you get started, though, we invite you to download our free EOT guide, which includes the fundamentals of an EOT, qualifying rules, benefits and other considerations.
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