Plan for succession with an EOT

By Steve Bell, Pierce

16 Nov 2022

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 immediate purchaser for the trading company
  • no capital gains tax on the vendors
  • enables succession in family companies where nobody in the family wants to continue
    the business
  • encourages employees to take a more active and constructive interest in the business
  • flexibility for current shareholders to sell all or some of their shares (subject to limits required by the controlling interest and limited participation requirements)
  • current owners can remain as directors and receive market rate remuneration
  • companies owned by EOTs can pay tax-free bonuses to their employees of up to £3,600, although NIC still remains payable

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.

Enjoyed this? Read more from Steve Bell, Pierce

Latest news

1

Lancashire manufacturer creates innovative recyclable housing cabinets for worldwide market Ritherdon cabinet

Lancashire manufacturer creates innovative recyclable housing cabinets for worldwide market

15 May 2025

2

Blackburn Chemicals unveils most advanced powder defoamer chemical plant in the world Jack Lamb, Sales Manager at Blackburn Chemicals, Bohdan Ratycz, International Trade Adviser at the Department for Business and Trade, and John Covill, Managing Director of Blackburn Chemicals

Blackburn Chemicals unveils most advanced powder defoamer chemical plant in the world

14 May 2025

3

HealthLink expands specialist medical device logistics services to the UK Health Link in Blackburn

HealthLink expands specialist medical device logistics services to the UK

14 May 2025

4

Victorian Plumbing Group announces move to reinvent MFI brand in half year results Victorian Plumbing acquired the MFI brand

Victorian Plumbing Group announces move to reinvent MFI brand in half year results

14 May 2025

5

Energy specialist Vital Energi joins London Gatwick’s £250m decarbonisation programme Mike Cooke managing director Vital Energi

Energy specialist Vital Energi joins London Gatwick’s £250m decarbonisation programme

14 May 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV122 May/June Launch Event
121 Lancashire Business View Magazine Launch
Networking
21 May 2025

LBV122 May/June Launch Event

Lancaster and Morecambe College, Lancaster, LA1 2TY

08:30 - 10:30

Sub36 Networking
Networking
11 Jun 2025

Sub36 Networking

British Jewellery School, Scorton, PR3 1BA

15:00 - 17:00

Lancashire Net Zero Carbon Conference
Net Zero Carbon Social 720px 1
Networking
18 Jun 2025

Lancashire Net Zero Carbon Conference

Crow Wood Hotel & Spa Resort, Burnley, BB12 0RT

08:30 - 13:00

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

RISE - The Academy for Female Leaders and Managers
WENDY BOWERS RISE Illustrstion copy.jpg.jpg
LBV Hub Seminars
02 Apr 2025 - 08 Oct 2025

RISE - The Academy for Female Leaders and Managers

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:00 - 15:30

Systems for Success: Unlock consistency, productivity and profit in your business
LBV Event Header.png.png
LBV Hub Seminars
15 May 2025 - 15 May 2025

Systems for Success: Unlock consistency, productivity and profit in your business

Bolton Arena, Arena Approach, Horwich, BL6 6LB

09:15 - 12:15

The Marketing Meetup: IRL Lancashire
LBV Hub Event Image.png.png
LBV Hub Networking
15 May 2025 - 15 May 2025

The Marketing Meetup: IRL Lancashire

Fraser House Hub, Lancaster, LA1 4XQ

18:00 - 20:00

The Business Network Central & East Lancashire
LBV Hub Networking
22 May 2025 - 22 May 2025

The Business Network Central & East Lancashire

Mytton Fold, Langho, BB6 8AB

11:30 - 14:15

Amber River True Bearing quarterly investment seminar
LBV Hub Seminars
22 May 2025 - 22 May 2025

Amber River True Bearing quarterly investment seminar

Cottons Hotel & Spa , Knutsford, WA16 0SU

16:00 - 18:00

Preston Freelancer Meet-Up: May
Freelancer Meet-Up May.png.png
LBV Hub Networking
22 May 2025 - 22 May 2025

Preston Freelancer Meet-Up: May

society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV122 Online Graphic
Subscribe now

Weekly news bulletin