Join us in celebrating Employee Ownership Day on Friday 20 June 2025!
This year’s official theme is #EOSmile – Share Your Smile, highlighting the power of collaboration, shared success, and the positive impact of employee ownership.
The rise of employee ownership
Employee ownership continues to grow rapidly. Over 2,000 UK businesses have now transitioned to employee ownership – a 40% increase on the previous year.
Key stats
- Approximately 200,000 employees now work in employee-owned companies
- These firms generate around £42 billion annually and see about 43% higher revenue growth than comparable non‑EO businesses
- Independent research shows EO companies are 8–12% more productive, with stronger job security, better employee wellbeing, upskilling, and R&D investment
2024 Autumn Budget – what’s changed?
Reforms announced in the 2024 Autumn Budget have now come into force, aimed at preserving the integrity of sales to an Employee Ownership Trust (EOT) structure. Key updates include:
1.Control restrictions – former owners/sellers and persons connected with them can still be trustees of the EOT, but they cannot control it
2.UK-resident trustees required – ensures EOTs are genuinely UK-based
3.Clarified tax treatment – this change ensures that, in most cases, it is clear the distributions from the company to the EOT to fund the sale consideration will not be taxable on the trustees of the EOT
4.Extended four-year compliance period – the time during which tax relief can be reclaimed from the seller if a “disqualifying event occurs” after the sale has been extended from one tax year to the end of the fourth tax year following the tax year of disposal.
Are EOTs still an attractive exit option?
Selling to an EOT continues to offer a range of significant benefits:
- Tax advantages: sellers can still benefit from Capital Gains Tax relief when transferring a controlling (≥50%) interest to an EOT.
- Ongoing involvement: sellers may remain employed in the business following the sale to the EOT.
- Tax-free bonuses: employees can still receive up to £3,600 annually tax-free.
- Business performance boost: research shows employed owned companies perform better in areas like employee engagement, retention, and profitability.
Get in touch
If you are contemplating a sale to an EOT, it would be wise to seek advice as early as possible.
Contact a member of our tax team by emailing enquiries@pmm.co.uk to discuss your situation in more detail.
