EOT – What does it mean for employees?

An employee ownership trust (EOT) is a unique type of trust that enables employees to own a stake in their company, providing them with a sense of ownership and control over the business. EOTs are established to hold shares in a company on behalf of the employees, who benefit from the profits and growth of the business.

EOT - What does it mean for employees?

EOT – Advantages and Benefits

The main advantage of an EOT is that it can help to improve the relationship between the company and its employees. By giving employees a stake in the business, they are more likely to feel invested in its success and be motivated to work hard to help it grow. This can lead to increased productivity, better customer service, and a more positive workplace culture overall.

Another benefit of an EOT is that it can provide financial benefits to employees. As the company grows and becomes more profitable, the value of the shares held in the EOT will increase. If the shares are sold the employees will share in the benefits of the proceeds of such a sale after tax is taken into account.

In addition, qualifying employees can receive tax-free bonuses of up to £3,600 per annum from an EOT-owned company.

EOT – Potential Drawbacks

However, the structure does require a fundamental change of the business ownership and operation including the requirement that the current owners dispose of a controlling interest in the business among other commercial considerations.

EOT –  Conclusion

Overall, an EOT can be a powerful tool for improving employee engagement, motivation, and satisfaction. Giving employees a stake in the business can help to align their interests with those of the company and provide them with a sense of ownership and control. However, it does require the disposal of a controlling stake in the business and it is important to carefully consider the potential benefits and drawbacks of an EOT before implementing one and to ensure that it is well-managed and aligned with the company’s overall goals and values.

Ballards can assist you to navigate through the tax and commercial considerations of moving to an EOT-owned structure.

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


This article has been prepared for information purposes only. Formal professional advice is strongly recommended before making decisions on the topics discussed in this release. No responsibility for any loss to any person acting, or not acting, as a result of this release can be accepted by us, or any person affiliated with us.

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