UK 
United States
The Government’s decision to halve Capital Gains Tax (CGT) relief on transfers to Employee Ownership Trusts (EOTs) has prompted fresh warnings that the UK’s employee ownership movement could lose momentum just as it reaches a record high.
The Treasury confirmed in last week’s Budget that statutory CGT relief will drop from 100% to 50%, taking immediate effect and reducing one of the key financial incentives for founders considering selling their business to employees. Until now, owners selling shares to an EOT typically paid no capital gains tax on the transaction and were able to secure full market value for their stake.
Why the EOT model is under pressure
EOTs allow founders to sell to employees through a trust structure that preserves continuity of culture and avoids many of the complexities associated with private equity or trade buyers. High-profile adopters include Richer Sounds, Riverford Organic Farmers and the Folio Society.
But professional services firm Lubbock Fine says the change drastically undermines the appeal of a route that has become increasingly prominent in succession planning. In 2024, the number of new EOTs rose by 25% to an all-time high of 681.
