Demystifying Employee Ownership Trusts

Exploring the Benefits and Disadvantages of EOTs


Across the UK, a dynamic shift is taking place within the business landscape, empowering employees more than ever before. One of the most prominent drivers of this change is the Employee Ownership Trust (EOT), an innovative structure enabling employees to collectively own a significant stake in their company.

At Ballards LLP, we’re passionate about supporting businesses navigate the complexities of financial matters, and understanding EOTs is crucial for anyone considering this path.


What is an EOT?

An EOT is a trust established to hold shares in a company on behalf of its employees. The trust is a separate legal entity, managed by trustees who act in the best interests of employee beneficiaries.

EOTs are funded by the purchase of company shares, typically using a combination of debt and equity financing. The company then makes annual payments to the EOT to gradually transfer ownership to the employees over time.


Why Consider an EOT?

Motivation and Engagement

Sharing ownership fosters a strong sense of belonging and responsibility among employees, leading to increased motivation, productivity, and engagement.

Attracting and Retaining Talent

EOTs offer a unique employee benefit, positioning your company as an attractive employer in a competitive market.

Succession Planning

EOTs provide a flexible and tax-efficient solution for business owners seeking a smooth and sustainable exit strategy.

Financial Benefits

Both businesses and employees can enjoy attractive tax breaks under EOT regulations.


What Are The Downsides of EOT?

Loss of Control

Existing shareholders may relinquish some control over the company as ownership transitions to the EOT.

Complexity and Time Investment

Establishing and managing an EOT requires careful planning and ongoing legal and financial expertise.

Not Suitable for All Businesses

EOTs are not a universal solution for every business and require careful consideration of specific circumstances.


Ultimately, the decision to pursue an EOT is a complex one requiring careful evaluation and guidance. At Ballards LLP, our experienced team of professionals can help you assess the feasibility of an EOT, navigate the legal and financial aspects, and ensure a smooth implementation process.

Ready to explore the potential of an EOT for your business? Contact Ballards LLP today for a free consultation. We’ll provide you with the insights and expertise you need to make informed decisions about your company’s future.


If you would like to find out how we can help please contact Martin Adams at or on 01905 794 504.

For more information about our services and how we can help your business please get in touch.
Scroll to Top