Sleepout for vulnerable older people
Grab your sleeping bag and get ready for Age UK Lancashire's Sleepout 2023!The fundraiser is back by popular demand for a third year running and we look forward...
Grab your sleeping bag and get ready for Age UK Lancashire's Sleepout 2023!The fundraiser is back by popular demand for a third year running and we look forward...
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Protect Duty, also known as Martyn’s Law, is a proposed piece of legislation that will apply across the whole of the United Kingdom and is expected to come into...
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WHAT IS INHERITANCE TAX? Inheritance Tax (IHT) is a tax imposed on the estate of a deceased person. It is levied on the value of the estate before it is distri...
What is an employee ownership trust (EOT)?
Employee Ownership Trusts (EOTs) were introduced by the Government in 2014 to provide a tax-efficient structure for the sale of a controlling interest in a trading company to its employees.
The flexibility and tax advantages of EOTs have helped them gain traction as an exit strategy in recent years, especially given the current economic outlook.
Using EOTs for succession planning can allow the owner of a business to pass on the company to its employees for full market value without incurring a CGT charge. This method of sale can provide an alternative to external sales, management buy-outs, or private equity-backed buy-outs.
The advantages of using a qualifying EOT for succession planning are as follows:
An EOT awards recognition for the contribution of a workforce yet maintains the culture and legacy already created. In turn, the business will find an increase in employee retention, and employment opportunities will be more attractive. Although the employee structure and day-to-day operations remain the same, the EOT gives employees the ability to contribute to business decisions.
Many family-owned or SME businesses do not have a succession plan in place so opting for an EOT removes any pressures should an illness or financial problem occur and in the future should the business choose to grow the process is proved to be more efficient with lower costs.
How can an EOT be structured?
Key Benefits
EOT Conditions
An incorrectly structured sale to an EOT can have adverse and unexpected tax consequences, therefore it is important to seek professional advice from an advisor with previous experience setting up EOTs before proceeding.
If you would like further information on Employee Ownership Trusts, please do not hesitate to contact the Pierce Corporate Finance Team or Tax Director Dominic Ball on 01254 688100.
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