What’s changed?
Rachel Reeves has announced that the capital gains tax (CGT) relief available on the sale to an employee ownership trust (EOT) will be cut by 50%. Previously, 100% CGT relief was available on the sale of a company to an EOT, provided certain criteria were met.
Should you still consider the sale to an EOT?
Selling to an EOT has become an increasingly popular alternative exit for business owners, particularly given the increase in CGT rates that the government announced in last year’s budget.
Those considering selling to an EOT may still find this an attractive option given the relief is still significant (if reduced). There are also reasons, beyond the tax relief, for selling to an EOT, such as succession-planning, securing the independent future of the business and the desire to benefit employees (eg through the income tax free bonus available for employees of an EOT owned company, among the other benefits of working for an employee-owned company which must prioritise the best interests of the workforce).
How can we help you?
If you’d like to know more about what exactly an EOT is please take a look at our previous articles:
If you’re interested in considering a sale to an EOT, we have extensive experience both advising companies on their transitions to EOT ownership, and reviewing EOT transactions and documents on behalf of other interested parties, such as banks and prospective trustees.
If you have any queries concerning EOTs, please contact John Kahn or Katie Marimon, who’ll be more than happy to help.
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