Employee Ownership Trust - the right exit strategy for you?

14 October 2020 Martin Dean View all News

Since the major changes to Entrepreneurs’ relief in the March Budget, and the changes in the economic climate from COVID-19, we are seeing more and more business owners looking to explore the potential of setting up an Employee Ownership Trust as a favourable exit strategy solution.

EOT’s are particularly beneficial to companies where the exiting shareholder wants to take a step back and exit, but the business does not necessarily have a natural successor in place to take over and continue their legacy.

 

Favourable tax position of Employee Ownership Trusts

Implementing an EOT is fairly complex in nature and may not be suitable for all businesses, but both existing shareholders and employees could benefit significantly from the favourable tax treatment an EOT provides, as well as other longer term financial and non-financial benefits for all beneficiaries of the EOT.

For example, if structured correctly, a sale of a trading company to an EOT could be tax free for the seller, saving a significant amount of CGT. In addition, employees of an EOT owned company can benefit from annual bonuses of up to £3,600 tax free.

There are numerous conditions that must be met for an EOT sale to be tax efficient, and the transaction is not right for all.

We recently held a webinar covering the topic of Successfully selling a business during a pandemic, containing more information on exactly how an Employee Ownership Trust works.  To access the recording, please follow the link. 

 

Watch now

 

To learn more about Employee Ownership Trusts, please get in touch with one of the tax team.  We have lots of experience advising clients in this area and work closely with our in-house Corporate Finance Team to ensure company transactions are completed in the most appropriate and tax efficient manner.  If you wish to discuss this with us, please get in touch with a member of our team.

 

 

Tax-Saving Tips for Individuals and businesses

Written especially for entrepreneurs and owner-managed businesses, this guide is full of planning ideas and tax risks to avoid.

If you're looking for ways to reduce your liability, claim your copy and start planning how you could pay less tax.

Download Now

Download our EOT guide today

Find out everything you need to know about Employee Ownership Trusts as a business exit strategy with our new EOT guide.

Download
COMPLETE THE FORM AND A SPECIALIST WILL BE IN TOUCH

Free Consultation

Simply complete the form and one of our team of specialists will be in touch within one working day.

Begin your journey with us today

Drop us a line today to see how we can help your business thrive
GET IN TOUCH