Employee Ownership Trust
Protect your staff’s future
As a business owner are you looking for a tax-efficient method to pass your business on?
You can pass your company to key management and employees tax-efficiently through an Employee Ownership Trust (EOT).
What is an Employee Ownership Trust?
An EOT is a path for a company to take when it is looking to transfer the ownership of the company to the employees and wider workforce, this is done via a trust. The process will end in the company having a controlling stake owned by the employees and means that legally this must benefit all employees on an equal basis.
The most famous example of an EOT is the John Lewis Partnership where all employees are owners of the company. This can be done to avoid a takeover of the company leading to staff redundancies. In essence an EOT is a way to protect your staff’s future.
There is no restriction to what type of company or who can do this so this can benefit any company and company’s employees.
Having an EOT can be a good way to have a succession plan for your business – many company owners are unsure of what they will do in the future and EOT can give you guidance and a plan.
You can use an EOT to see your company grow after you decide you have had enough – by giving the employees the ownership of the company it will build enthusiasm and drive off expertise they already have in the industry to help the business grow.
Not-for-profit businesses – most commonly, if you own a business of this nature, as there is no profit, there is no need for one person to be in control. By inviting employees to participate in ownership, it draws on knowledge and help of willing and like-minded people.
- Must be a trading company.
- The EOT must have a majority control.
- Current shareholders cannot make up 40% of new owners. After EOT Profit must be split evenly once the EOT is complete.
The most famous example of an EOT is the John Lewis Partnership where all employees are owners of the company. This can be done to avoid a takeover of the company leading to staff redundancies. In essence an EOT is a way to protect your staff’s future.
There is no restriction to what type of company or who can do this so this can benefit any company and company’s employees.
Having an EOT can be a good way to have a succession plan for your business – many company owners are unsure of what they will do in the future and EOT can give you guidance and a plan.
You can use an EOT to see your company grow after you decide you have had enough – by giving the employees the ownership of the company it will build enthusiasm and drive off expertise they already have in the industry to help the business grow.
Not-for-profit businesses – most commonly, if you own a business of this nature, as there is no profit, there is no need for one person to be in control. By inviting employees to participate in ownership, it draws on knowledge and help of willing and like-minded people.
- Must be a trading company.
- The EOT must have a majority control.
- Current shareholders cannot make up 40% of new owners. After EOT Profit must be split evenly once the EOT is complete.
For the company and previous owners
Total Capital Gains Tax (CGT) Exemption on sale with no risk of CGT clawbacks. This saves you 10% CGT at Business Asset Disposal Relief (BADR) rates.
For the employees
You can be paid an annual tax-free bonus of £3600 per annum.
Please contact our team on 01384 376 964 to find out more.