Business Succession and EOT’s

What are EOTs?

Employee Ownership Trust (“EOT”) businesses are owned indirectly by their employees via a Trust which operates for the benefit of employees. The most famous of this type of business is the John Lewis Waitrose Partnership, but across the UK there are many other high profile EOTs such as Aardman and Richer Sounds.

Our experience

Maple Accountancy is a member of the Employee Ownership Association and advises businesses on converting to employee ownership and supporting existing EOTs.

What are the Benefits for Business Succession Planning?

Benefits for current business owner

• Allows an exit where there is no obvious third-party purchaser.
• Can provide a quick and streamlined exit route for shareholders.
• Allows a tax-free disposal by UK individual shareholders.
• Owner can retain some involvement (up to 49%).
• Share capital still available to incentivise management and key employees.

What you need to know

• Popularity and Purpose: EOTs are becoming popular for succession planning, allowing business owners to sell their companies while protecting their legacy and local jobs.
• Eligibility: To create an EOT, the business must be trading and a limited company. The EOT must buy at least 51% of the business.
• Advantages: EOTs offer significant tax benefits, including no capital gains tax for the seller and an annual tax-free sum of up to £3,600 for all employees.
• Structure: An EOT involves three parties: the outgoing party, the employees, and the trustees. Trustees can include outgoing directors and neutral parties like accountants.
• Celebration: EOTs are celebrated annually on June 23rd, known as EOT Day, organized by the Employee Ownership Association.

If you need more details or have specific questions, feel free to ask!

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