Employee Ownership Trusts (EOT)

HURST are experts in creating Employee Ownership Trusts (EOTs). We are proud members of the Employee Ownership Association

What is an Employee Ownership Trust?

The first question, is often the easiest, is an EOT suitable for our business? The more in-depth and lengthy discussion is constructing the EOT structure and formalising the trust agreement. We have been involved in many transfer of ownerships, and are well rehearsed in the concerns and options for both sides. 

Here is a brief introduction from Tax Partner, Liz Gallagher, who talks about the journey to employee ownership and the benefits that go with it.

 

 

Here are some useful tax incentives to consider:

  • The company transferring the shares into the EOT must be a trading company. Partnerships, therefore, would have to incorporate to benefit.
  • The EOT must benefit all employees on similar terms.
  • The trustees must retain at least 51% of the controlling interest otherwise tax relief is withdrawn.
  • The number of shareholders after the transfer of control to the EOT cannot exceed 40% of the total number of employees.
  • Whilst generous, the tax breaks available will vary depending on your circumstances and we will be happy to give you an idea of what these could be.

 

Why consider an Employee Ownership Trust?

An EOT is an effective tax solution to address succession issues and is one of the drivers for considering this structure;

  • Based on an independent valuation, shareholders can sell their shares for the full market value.
  • Not all shareholders have to sell their shares although control must pass to get the maximum tax break.
  • The transaction can, in most cases, happen quickly and smoothly.
  • An EOT can be attractive to potential new staff and can be a positive point of differentiation from competitors.

 

Employee Ownership case studies

  • HURST Help Otto Simon Holdings Become Employee-Owned. Click here.
  • HURST Advises as Northpoint Becomes Employee-Owned. Click here.
  • HURST Advises as Kinetic Group Becomes Employee-Owned. Click here.
  • HURST Advises as BTS Becomes Employee Owned. Click here.

 

How can we help?

Selling all or part of a company to an EOT can be a great solution for many businesses. HURST is well placed to assist businesses considering an EOT as we can assess the approach against other disposal methods, and if it comes to it, we have the know-how to successfully implement the EOT.

If you would like to receive more information regarding Employee Ownership Trust please Complete the form below to make contact.