Employee OwnershipTrusts

Sell your business to your employees to gain generous tax benefits and safeguard the future of your business.

Employee OwnershipTrusts

Employee Ownership Association

When an appropriate route, an EOT is the most tax efficient way to sell your business.

An EOT enables a company to become owned by its employees. A trust is set up by the existing owners for the benefit of all employees. The trust then becomes the majority owner of the business.

Employee ownership is highly beneficial for both selling shareholders and the employees themselves. Watch our video below to find out more.

The Tax Benefits of an EOT

There are notable tax benefits of an Employee Ownership Trust, for the selling shareholders, existing employees, and the business itself.

Tax-Free Bonuses up to £3,600

All qualifying employees can enjoy tax-free annual bonuses of up to £3,600.

Fully Exempt from Capital Gains Tax

When you sell your controlling stake to an EOT, you are completely exempt from Capital Gains Tax.

Inheritance Tax Exemption

Under the correct conditions, shares transferred to an EOT will be an exempt transfer for inheritance tax.

Learn how Shorts has helped clients sell their business to an Employee Ownership Trust

EOT Success Stories

  • T Allen Engineering Services

    "An EOT categorically ticks the box financially, but if you also want to look after your staff, you want the business to continue, and you want to leave a legacy, then an EOT is a great way to achieve that."

    Read more

Employee Ownership Trusts

Frequently Asked Questions

  • What is an Employee Ownership Trust?

    An Employee Ownership Trust (or EOT) is a business ownership model which enables the employees to gain a controlling stake in a company. The UK government introduced EOTs in 2014, hoping more companies would follow the John Lewis model.

    You can learn more about what an Employee Ownership Trust is through our blog, or by contacting our corporate finance team today. Answers to further key questions can be found here.

  • How do Employee Ownership Trusts work?

    Employee Ownership Trusts enable a company to become owned by its employees.

    For this to happen, a trust must be set up for the benefit of all employees. The trust will then purchase a controlling stake in the business to become majority owner. This usually happens as part of an existing shareholder’s exit or succession planning strategy. Find out more.

  • How is an Employee Ownership Trust funded?

    An Employee Ownership Trust can be funded partly through surplus cash on the trading company’s balance sheet. For the remainder of the sale, an EOT will commonly hold a debt to the existing shareholders, which is repaid over time and taken from future profits generated by the trading company. Funding can also be sought from external funders.

    You can learn more about funding Employee Ownership Trusts in our blog. For more detailed information on how Employee Ownership Trusts are funded, tailored to your own company, get in touch today.

  • What are the tax benefits of an Employee Ownership Trust?

    Selling your business to an EOT brings three key tax benefits, benefitting both yourself and your employees. First, when you sell a controlling interest in your company to an EOT, the sale will be totally exempt from Capital Gains Tax. Second, when you dispose of your shares through an EOT, this will not be a chargeable transfer for Inheritance Tax.

    Third and finally, employees of companies owned by an EOT are entitled to tax-free cash bonuses of up to £3,600 a year. This incentivises employees to perform well and helps EOT owned businesses attract the best talent.

  • Is an Employee Ownership Trust right for you and your business?

    Selling your business to your employees means you are breaking away from traditional corporate structure and changing the way your employees think about the company.

    Employee ownership is encouraged because employee-owned companies are considered a more sustainable business model, focussed on long term investment. Business performance can also improve because employees are better incentivised and more committed to the business.

    Employee-owned companies also often have high employment standards and a commitment to corporate responsibility and ethics.

    Find out more about how well-suited employee ownership is for your company by reading our blog or contacting our corporate finance team today.

  • What companies are Employee Owned?

    Well known companies owned by employees include John Lewis, Richer Sounds and the Arup Group. You can see a longer list of employee-owned companies that are trading in the UK in our blog.

  • Is Employee Ownership Right for Your Business?

    Employee-owned companies are becoming more numerous, and many success stories can be read online from companies that have made the transition themselves.

    The consensus among advocates is that employee-owned companies encourage greater investment and productivity and are therefore more sustainable.

    You can find out more about whether an EOT is right for your company by speaking to us, or reading our blogs.

  • How do companies transition to employee ownership?

    Transitioning to employee ownership, such as through selling a controlling stake to an Employee Ownership Trust (“EOT”) , requires careful planning and consideration. You must understand your reasons for selling, assess the differences between direct and indirect employee ownership, understand your shares value, and have considered succession planning carefully.

    You can learn more about planning the transition to employee ownership in our blog.

What our Corporate Finance clients say about us.

Client Testimonials

We were extremely happy that when we made the decision to sell J W Hutchinson we were able to agree a sale with another family-owned funeral directors, AW Lymn The Family Funeral Service. The families have known each other for generations so we know the company and its clients are in safe hands. We were supported through this from the start by both Shorts and Keebles, with their help and advice making what could have been a stressful time into a smooth and successful sale

Alison and Anthony Corbett
JW Hutchinson Funeral Services

We had an initial meeting with Shorts and got a good feel for that meeting. So, it was decided we would appoint Shorts to act on behalf of the management buyout team. The expertise, professionalism, commitment and passion to get the deal done came across very strongly.

Matt Robinson
Juratek Limited

Working with Shorts was like having a 'business SatNav' - showing me what to do next, and then just plotting the path for me.

Stacy Phillips
Bullseye Car Parts

Shorts managed the whole process for us, with professionalism and courtesy. We found them particularly helpful in the negotiating of the finer details of the sale, i.e.- the conditions / contracts etc. post deal. Having experts in different fields, Shorts handled all issues quickly

Andrew Larkin, Director
Pentag Gears Limited

I would absolutely recommend any company considering a sale process to discuss and ultimately use the team at Shorts. The team (and especially Adam) were always on hand to deal with queries and offer us advice and the process helped greatly by the experience they were able to bring to every discussion and meeting. Shorts ability to be a "friendly co-pilot" throughout the process, kept us on track to the completion

Paul Stead, Director
TSG Media Limited

We found the Shorts Corporate Finance team's knowledge of deal structuring and negotiating added real value in ultimately securing the best outcome. We wouldn't hesitate to recommend Shorts to anyone looking for advisers to sell their business.

Richard Carr
Mechan Limited

A superb piece of work

Chris Alsop
HSBC

From the industry and our team

EOT Insights

What is the John Lewis model?

John Lewis has been subject to criticism in the Sheffield City Region this year, as a result of the announcement to close their Sheffield store; however, as the largest employee-owned company in the UK, they remain the standard bearer for employee ownership.

Read more

Selling Your Business to an EOT - Key Questions Answered

This article is a recap of the June 10th Webinar event: Selling your business to an Employee Ownership Trust – Q&A. A full video recap can be accessed here.

Read more

Exit Strategies for Business Owners

For business owners, one of the most powerful tax saving ideas is to take money out of a business you own, or partially own, when you exit from it. This is known as a business exit strategy. As a business owner, a business exit strategy allows you to reduce your stake in a company and generate a profit on your investment if the company has been successful.

Read more

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COVID-19In line with government guidance we’re delighted to be welcoming back clients, business partners and the Shorts team to our offices from 19th July 2021. We want to make sure that all visitors feel comfortable during their visit, please let us know if there is anything you would like us to put in place prior to your visit. We’ll still be following best practice and will have all hygiene requirements covered.