Debra Martin, partner and head of the corporate team at Geldards LLP in the East Midlands, discusses the growing popularity of employee ownership trusts.
The use of employee ownership trusts (EOTs) to transfer ownerships of companies is becoming increasingly popular.
Originally launched in 2014 as a tax-efficient way of transferring ownership of a company, EOTs are designed to encourage a more ‘collegiate’ ownership model.
They are attractive to business owners as a way to pass on their companies outside of a normal “trade sale” to a competitor or a management buyout.
In the last year, the pandemic, combined with fears over potential changes to capital gains tax (which never happened), have led many business owners to re-evaluate their circumstances.
As a result, the use of EOTs is on the rise. As of last year, there were 470 employee-owned businesses in Britain, according to figures from the Employee Ownership Trust. While up to date figures are delayed because of the pandemic, the Trust believes the last year will be the biggest growth year yet.
And it’s no surprise EOTs are going mainstream – they are a hugely attractive proposition for many reasons.
So, what is an EOT? Basically, an
link source - East Midlands Business Link General