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Transition to Employee Ownership

Updated: Feb 10, 2022

Expand your options...

Employee ownership trusts are becoming increasingly popular achieving 21% average growth year on year since 2018. Due to changes in the capital gains tax regime in 2020, employee ownership trusts, now regularly outperform selling on the open market.

We believe employee ownership should be considered by every shareholder contemplating succession. Here’s why...

Tax Free: Rather than selling your business to an outside investor, your business can be sold to your employees' tax free with a 98% rate of success. Any excess cash forms part of the consideration and is distributed tax free on day one.

Flexible: Employee ownership gives you the opportunity to structure the terms of the transaction to suit your situation. You can proceed at your own pace and continue serving as a trustee, director, or employee or step away entirely.

Ethical: When the ownership of your business transfers to your employees, it transitions from an autocracy to a democracy. Employee representatives are elected to the board of trustees and board of directors preserving some legacy company values and values important to employees moving forward. Employees are eligible for tax free bonuses up to £3600 per annum.

How it works...

In 2014 the UK government recognised that employee ownership delivered increased productivity and employee engagement, contributing to a stronger economy. To encourage the growth of employee-owned companies, Employee Ownership Trusts (EOT’s) were introduced, benefiting from generous tax incentives.

Employees use company profits to acquire a majority stake. The shares are held in trust for the benefit of the employees, similar to the John Lewis model.

Employee ownership delivers all the benefits of having sold your business and more, including getting your time back. In addition, you can make sure your business is heading in the right direction before saying goodbye completely.

Why we're Different...

Changes to CGT in 2020 enabled employee ownership to regularly outperform selling on the open market. We were one of the first advisors to specialise in employee ownership.

A common misconception is that HMRC will only approve average valuations. We don’t knowingly undervalue businesses. We use unique techniques, saving our clients significant amounts of money.

We project manage the moving parts, so you can continue doing what you do best. We’re flexible, we go at your pace and our fees can be paused should you need more time.

Employee ownership isn’t complex and we keep it simple and effective.

Call us on 01384 274 778 or 075 888 925 88 to discuss or go ahead and book a free consultation to explore your options.

For more details visit our dedicated website


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