Practical advice to support employee ownership and long-term business succession
An Employee ownership trust (EOT) can provide an effective succession solution for business owners who want to transition ownership while preserving the long-term culture and independence of their organisation.
Selling a business to an Employee ownership trust allows employees to benefit from future success while enabling existing shareholders to realise value from the business they have built. For many organisations, this approach strengthens employee engagement, supports recruitment and retention, and helps maintain continuity of leadership and strategy.
At Moore UK, our tax, legal, corporate finance and HR specialists work as one team to support businesses moving to employee ownership. This joined-up approach ensures all commercial, people and technical aspects of an EOT transaction are fully aligned.
What is an employee ownership trust?
An Employee ownership trust is a trust structure that holds a controlling interest in a company on behalf of its employees. The trust must benefit all eligible employees on a fair and inclusive basis.
When structured correctly, an EOT can provide tax advantages for shareholders and employees while supporting long-term ownership stability.
For many owner-managed businesses, an EOT provides an alternative to traditional exit routes such as trade sales or management buyouts, allowing founders to transition ownership in a way that protects the legacy and values of the organisation.
Potential tax considerations
Employee ownership trusts can offer tax advantages for both selling shareholders and employees, provided the relevant qualifying conditions are met. However, tax should be considered alongside the wider commercial, governance and cultural objectives of the business when evaluating whether an EOT is the right ownership model.
Shareholders
Where the qualifying conditions are met, shareholders who sell their shares to an Employee ownership trust benefit from a 50% reduction in capital gains tax, with half of the gain exempt and the remaining half taxed in the usual way. This makes an EOT an appealing option for owners looking to transition ownership while preserving the long-term independence of their business.
Employees
Companies owned by an EOT can pay annual bonuses to employees that are free from income tax, subject to statutory limits and eligibility rules. This can help reinforce employee engagement and support the development of a strong ownership culture across the organisation.
How we support you
Our multidisciplinary teams provide end-to-end support, guiding you through the initial strategic considerations, managing the full implementation of the EOT transaction, and delivering ongoing lifecycle services that keep your employee-owned structure working smoothly long after completion.
Assessing whether an EOT is right for your business
An EOT is one of several ownership and succession routes available to business owners. We help you assess whether an EOT is appropriate by considering the commercial, financial and cultural implications.
This includes ensuring that other ownership options have been considered where appropriate, including management buyouts and trade sales, as well as alternative employee share schemes such as EMI arrangements.
Our role is to provide objective advice so that business owners can make well-informed decisions about the future of their organisation.
Implementing an employee ownership trust
Where an EOT is the right solution, we support the transaction from initial planning through to completion.
Our teams work together to provide joined-up advice across:
- tax structuring and planning
- corporate finance advice, including valuation and potential funding arrangements
- legal structuring and documentation through our specialist legal teams
- HR advisory support to help manage employee engagement and communication
This integrated approach helps ensure that the transaction is implemented efficiently and in a way that supports the long-term success of the business.
Governance and operation of the trust
Effective governance is an important part of a successful employee ownership model.
We advise businesses on matters including trustee structures, employee engagement mechanisms and the ongoing responsibilities associated with employee ownership. This helps ensure that the trust structure operates effectively and continues to meet the relevant qualifying conditions.
Ongoing support after the transaction
Our involvement does not end once the EOT transaction has completed.
We continue to support businesses as they develop and operate their employee ownership structures. This may include advising on employee forums, designing bonus arrangements that align with the ownership model, and supporting trustees and directors as the organisation adapts to employee ownership.
Being available to answer ongoing questions and provide practical advice helps ensure the structure remains compliant and continues to support a successful employee ownership culture.
Why work with us?
Clients choose us because we combine technical expertise with practical, commercial insight.
Our Employee ownership trust advisory offering brings together specialists across tax, legal, corporate finance and HR, allowing us to provide coordinated advice across every stage of an EOT transaction. This joined-up approach helps ensure that commercial, legal and people considerations are addressed alongside the tax aspects of the transaction.
Through the Moore Global network, we can provide access to wider expertise where required, ensuring businesses receive clear and practical advice throughout the employee ownership journey.
Speak to our EOT specialists
If you are considering an EOT or would like to explore alternative succession options, our advisers would be pleased to talk.
Contact our team to start the conversation.