Glossary · UK
What is Employee Ownership Trust?
A trust that holds a controlling stake in a company for the benefit of its employees, enabling 0% CGT on the sale by qualifying shareholders.
Full Definition
An Employee Ownership Trust (EOT) is a form of employee benefit trust introduced by the Finance Act 2014. When a shareholder sells a controlling stake (more than 50%) to an EOT, the gain is exempt from Capital Gains Tax -- one of the very few 0% CGT reliefs. The company must be a trading company or group, and the EOT must hold the majority stake for the benefit of all employees on equal terms. Employees can receive up to GBP 3,600 per year in income tax-free bonuses from the company after the sale. The Nuttall Review of Employee Ownership (2012) recommended EOTs as a way to increase employee ownership and retain businesses in the UK. Key conditions: the trust must benefit all eligible employees; no more than 2/5 of the trustees can be former owners or connected persons.