Budget 2025 | Cuts to Employee Ownership Trust relief spark concern over future growth

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.