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What is employee ownership?​

Employee ownership grants all employees of a business ownership of all or most of the company shares, via a trust. Employee ownership provides an avenue for owners to sell their business or make a partial exit.

Many companies are now going down the employee ownership route, as it offers a way of rewarding staff for their hard work, promoting a positive working culture and attracting new talent to the business.

Is EOT right for my business?

We believe that most businesses can benefit from an employee ownership trust, but it can be particularly attractive if you:

  • Are looking to retire from a business you own
  • Are starting a new business and want to attract talent
  • Are keen to give your employees a stake in the business
  • Want to ensure that your business can stay independent long-term

Tax benefits

  • Those selling their shares may do so free of capital gains tax
  • Once a company is owned by an EOT, it can pay annual bonuses to its employees free of income tax

The two main conditions to warrant the tax breaks are:

  • The trust (employees) must hold more than 50% of the shares in the company
  • If employees receive any benefit from the trust, they must all be included and on the same terms

What are the benefits OF EOT?

Here at Rubric, we deal with all of the legal requirements when working with an EOT. We will also refer you on to our specialist tax accountant who will deal with the valuation and the tax structuring.

Benefits to owner:

  • Reassurance that your employees will benefit after your exit
  • More control over the sale process and timings
  • Reduced buyer risk
  • No capital gains tax

Benefits to employees:

  • Tax-free bonus
  • Increased control
  • Shareholder benefits
  • Employee engagement

0117 435 4350 | info@rubric.law

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