What is an Employee Ownership Trust (EOT)?

An Employee Ownership Trust (EOT) is a unique and innovative business structure that enables the transfer of ownership to employees, via a Trust arrangement, fostering a culture of shared responsibility, collaboration, and long-term success. By placing your business in an EOT, you empower your workforce, preserve your company’s values, and ensure a secure and prosperous future for all.

An EOT a tax incentivised mechanism where a Trust is created for the purpose of owning shares in a trading business. The beneficiaries of the Trust are the employees of the company, subject to certain qualifying obligations, such as a minimum period of employment.

What is it like working for an EOT
What is it like working for an Employee Ownership Trust?

Why Choose Employee Ownership Trusts?

Businesses all over the UK are embracing EOTs as a forward-thinking solution for succession planning and business continuity. Here's why:

Engaged and Motivated Workforce

By giving employees a stake in the company's success, EOTs foster a deep sense of ownership and motivation, resulting in increased productivity, loyalty, and commitment. Typically EOTs have greater productivity and staff retention.

Legacy Preservation

Maintain the legacy and ethos of your business even after you step away. EOTs provide a mechanism to pass on the torch while ensuring your company's values and purpose endure. Most businesses who become an EOT will not encounter future issues on succession planning. The EOT will continue to exist irrespective of the identity of the individual employees.

Tax Advantages

EOTs offer attractive tax incentives, including capital gains tax exemptions for owners selling a controlling interest to the trust, making the transition financially favourable. Employees can also earn up to £3,600 per annum tax free by way of the profit distribution mechanism. This profit distribution is also deductible from the Companies net profit, thereby reducing the Corporation tax liability of the Company.

Stability and Sustainability

EOTs provide stability for your business, reducing the risk of external takeovers or disruptions. They encourage long-term decision-making, focusing on the welfare of employees and the organization as a whole. It will not be necessary to buy out shares from exiting directors or employees. As a consequence decision making in the business is made for the good of all employees rather than a smaller number of shareholders.

Attracting Talent and Succession Planning

Employee ownership is an appealing proposition for talented individuals seeking meaningful work and a voice in the company's direction. EOTs offer a robust succession plan by nurturing and grooming internal talent for leadership positions.

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Your Journey to Employee Ownership Begins Here

At EmployeeOwnershipTrust.com, we are your trusted resource for understanding and implementing EOTs. Our comprehensive platform provides a wealth of information, resources, and expert guidance, including:

EOT Explained

A detailed breakdown of what EOTs are, how they function, and their benefits for businesses and employees alike.

Success Stories

Real-life case studies and testimonials from businesses that have successfully transitioned to employee ownership. Discover their experiences, challenges faced, and the positive outcomes achieved.

Legal and Financial Guidance

In-depth insights into the legal and financial aspects of establishing an EOT, ensuring compliance, and maximizing the advantages available.

Employee Engagement Strategies

Practical advice on fostering employee buy-in, building a culture of shared ownership, and cultivating a motivated and engaged workforce.

EOT Implementation Roadmap

Step-by-step guidance on navigating the transition process, from initial planning and communications to restructuring and governance.