Reflections on employee ownership

The use of employee ownership trusts (EOTs) is on the increase. This is perhaps not surprising – it is a great example of how the tax system can be used to drive a particular behaviour and encourage a different way of thinking. Here we reflect on some of the practical and technical issues that have arisen in our experience when advising on EOTs.

Why an EOT?

Well the tax relief available is attractive for a start. That said most clients are more concerned about the longevity of their business. It has been their life’s work and they are very proud of it. Leaving it to employees works for them at an emotional level. They may well have explored a trade sale but not all businesses lend themselves to a trade sale. As with many businesses succession can be a challenge and identifying suitable management with the...