Is an EOT Still Worth It in 2026?

The short answer is yes: for the right business and the right owner, an employee ownership trust (EOT) remains one of the most compelling exit routes available to UK business owners. But the question deserves a more considered answer, because the landscape has changed a little.

What changed for EOTs in 2025?

Last year, the government reduced the capital gains tax relief available on EOT transactions from 100% to 50%.

Previously, the effective tax rate on a qualifying EOT sale was 0%. That figure now sits at 12%, based on the current CGT rate applied to 50% of the gain.

That is still a low effective rate by almost any measure. Compared to a trade sale or MBO, where sellers typically face full CGT exposure, the EOT route retains a meaningful tax advantage. But the change has prompted many business owners to revisit whether the structure still makes sense for them. And that is entirely understandable.

Tax was never supposed to be the whole story

One of the risks with EOTs has always been that sellers enter the process primarily motivated by tax efficiency. That mindset tends to create problems further down the line.

An EOT works best when a business owner genuinely wants to protect the legacy they have built and allow employees to become the main beneficiaries of the business going forward. The structure rewards commitment to those outcomes.

Sellers who approach it transactionally, focused on maximising their exit proceeds rather than setting the business up for long-term success, often find the arrangement harder to sustain.

And if the business underperforms post-transaction, they may ultimately receive less than they expected anyway.

What the EOT actually offers

Beyond tax, the EOT provides some advantages that tend to be underappreciated in the early stages of exit planning.

• Certainty is one. Unlike a trade sale, which can fall through at any point in the process, a well-structured EOT is within the control of the selling owner. If the business qualifies and the process is run correctly, you’ll have certainty of exit in a defined time frame.
• Sellers also receive full market value for their shares, based on an independent valuation. There is no negotiation with a third-party buyer and no risk of a deal being renegotiated late in the process.
• For owners who are not ready to exit immediately, the EOT also allows a more gradual transition. Staying involved in the business for several years post-transaction is not unusual, and in many cases it is beneficial for both the seller and the employees.

What to consider in 2026 specifically

The tax change has introduced a funding consideration that was less relevant before.

With an effective tax rate of 12%, businesses that are not cash-rich will need to factor in how that liability is funded. A longer repayment period or external financing are both workable options, but they need to be planned for early!

The importance of good advice has also grown a lot. HMRC can claw back the relief if the conditions of the EOT are not met, both at the point of transaction and post-completion. In other words, the EOT has to be a sustainable move. A strong advisory team across tax, corporate finance and legal is simply not optional.

All in all, for the right business with the right motivations, an EOT in 2026 remains a very good idea. Download our full EOT guide today if you’d like to learn more.

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