By Megan Solomon, Corporate Solicitor
For businesses considering succession planning or ways to incentivise and retain key staff, employee ownership trusts (EOTs) offer a compelling option. Beyond aligning employees with the long-term success of the company, EOTs provide significant tax advantages, including capital gains relief for selling shareholders and potential income tax efficiencies for employees. Properly structured, they can be an effective tool for business continuity, employee engagement, and overall value preservation.
What are EOTs?
EOTs are a type of discretionary trust set up primarily for the benefit of employees and former employees of a company (collectively known as employee benefit trusts (EBTs)).
Impact of the Budget on EOTs
Up and until Rachel Reeves’ 2025 Autumn budget, an individual disposing of their interest in a trading company to an EOT (where qualifying requirements are met) benefit from 100% capital gains relief (dependent on certain timeframes). The CGT relief alone reached £600m in 2021/2022 and was forecast to rise to £2bn by 2028/2029 without action.
Effective from today, the CGT relief on such disposals has been reduced to 50%.
Whilst this significantly cuts the tax-relief available for those looking to establish EOTs, the relief has not been removed completely.
How Goughs can help
Now that the rules on CGT relief for EOTs have changed, will this alter your exit strategy? Why not take this opportunity to discuss your future plans with us and we can help re write your future.
Post-Budget Briefing
Why not join us at our exclusive ‘Post Budget Briefing?’
- To be hosted alongside Fidelius Financial Advisors and Pearson May Accountants
- Wednesday 7th January 2026, from 6pm
- At the beautiful Hartham Park Estate, Corsham
- BOOK NOW