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Do you know how an Employee Ownership Trust can be used to aid succession planning in your business? You might be an owner thinking of a long term retirement strategy or a manager with the desire and energy to take a business to the next level. Either way, converting to an Employee Ownership Trust might be the ideal way to secure your future.

Our Corporate team can explain the benefits of Employee Ownership to both vendors and purchasers and lead you through the sales process. We assist businesses to set up the trust, establish the trust company, create the share purchase agreement, including structuring any deferred consideration document.

Download our Employee Ownership Trusts Brochure


What is an Employee Ownership Trust (EOT)?

An EOT is a trust that enables a company to become majorly or entirely owned by its employees and can be set up by a company’s existing owners, perhaps as part of their exit or succession planning strategy, or by founders starting a new business which they wish to be employee-owned. It was created by the Finance Act 2014, to encourage more companies to become employee owned.

Importantly for many business owners, an EOT creates two tax benefits:

  • Those selling their shares may do so free of capital gains tax
  • Once a company is owned by an EOT, it can pay annual bonuses up to £3600 to its employees free of income tax

There are two main conditions to enable the tax breaks:

  • The trust must hold more than 50% of the shares in the company
  • If employees receive any benefit from the trust, they must all be included and on the same terms

Why consider Employee Ownership?

Employee Ownership is one of the fastest growing SME business ownership models. For many businesses, it is not just a viable solution to ownership succession but it potentially superior to the alternatives of third-party sale, management buy-out or liquidation.

Benefits of Employee Ownership for the:

Retiring / Business Owner

  • Peace of mind that the business is in good hands
  • Leadership succession can be implemented over time
  • Realise the value built up in your business
  • Legacy continues


  • Preservation of the businesses values and culture
  • A solid foundation for further growth
  • Helps to create a more resilient and adaptable business, with a long term commitment
  • As well as rewarding everyone’s contribution, also enables targeted rewards for key people.
  • Increased productivity  – In 2021 the EOAs Top 50 companies had productvitiy growth of 9.4% ‘like for like’ or 5.2% as a whole, double the UK average of 2.6%


  • Employees have a stong reason to be more engaged, committed and motivated, with a clear shared purpose
  • No need to make personal investment or changes to their employment
  • A full share in the rewards of success and can received a tax free bonus of up to £3600 per annum

Who manages the Employee Ownership Trust?

The Employee Ownership Association will be run by its trustees. Their role will be to ensure the company is led in a way that maximises employee engagement and commitment whilst the running of the company is left to the management team.

How do Employee Ownership Trusts perform?

The Employee Ownership Association releases annual reports on the 50 biggest employee-owned companies in the UK including John Lewis, Arup Group, Mott MacDonald Group and Greenwich Leisure.

The top 50-employee companies in the UK generated over £20bn combined sales in 2021 and employ over 150,000 staff. These companies saw an average increase of 4.6% in sales, year-on-year alongside 25.5% annual growth in operating profit. Also reported was an overall boost in productivity of 4.6%.


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