As succession planning becomes an increasingly important part of long-term business strategy, many SME owners are exploring alternatives to traditional exit routes. One option that has grown significantly in popularity in recent years is the Employee Ownership Trust (EOT).
An EOT allows business owners to sell a controlling share of their company to a trust that holds the shares on behalf of the employees. This model helps protect the future of the business while rewarding the people who helped build it.
For many owners, it offers a way to exit the business while preserving its culture, legacy, and long-term stability.
Why are EOTs becoming more popular?
- Significant tax advantages
Owners who sell a controlling interest to an EOT can benefit from 0% Capital Gains Tax on the sale. - Protecting the business legacy
The company’s culture, identity, and long-term vision can remain intact, ratherthan changing under external ownership. - Stronger employee engagement
Employees become beneficiaries of the trust and may receive tax-free bonuses and profit-sharing opportunities. - A smoother succession pathway
EOTs allow owners to step back from the business without the disruption that can sometimes come with third-party sales.
Is an EOT right for your business?
Employee Ownership Trusts are often a strong fit for:
- Profitable SME businesses
- Owners without a clear succession plan
- Businesses where culture and continuity are important
- Founders looking to exit while protecting their team and legacy
Considering an Employee Ownership Trust?
Our corporate team has extensive experience advising on EOT transactions and supporting business owners through the transition to employee ownership.
Taibah Rehman, Corporate Solicitor at Sumer Law, specialises in Employee Ownership Trust structures and regularly advises clients on implementing EOTs successfully.
