UUÂãÁÄÖ±²¥

Succession planning ― employee ownership trusts (EOTs)


Produced by Tolley in association with
Owner-Managed Businesses
Guidance
tag-icon Autumn Budget 2024

Succession planning ― employee ownership trusts (EOTs)


Produced by Tolley in association with
Owner-Managed Businesses
Guidance
tag-icon Autumn Budget 2024
imgtext

Employee ownership trusts (EOTs) ― the basics

An EOT is a discretionary trust that acquires and then hold a controlling interest in a company for the benefit of its employees. Sales of shares to EOTs are most commonly funded using future trading profits of the company or group. It is also possible to use bank borrowing to finance part of the purchase consideration. Interest can be charged on purchase consideration to the extent it is not paid up front. In addition, selling shareholders can take an arm's length salary for any work they will do as directors or employees after the sale.

Once the consideration has been paid in full, further profits of the business or gains realised on a future exit can be paid to the EOT and distributed to or otherwise applied for the benefit of employees.

Where a controlling interest in a trading company is sold to an employee ownership trust EOT and the necessary qualifying conditions are met, the sale of the shares of

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL
Craig Simpson
Craig Simpson

Tax Partner and Owner at Bates Weston Tax LLP , Corporate Tax, OMB, IHT Trusts and Estates

Craig Simpson is a Tax Partner and owner of Bates Weston Tax LLP and Bates Weston Tax Advisory Limited. He specialises in providing tax advice to privately owned companies and high net worth families. Craig set up his own advisory practice back in 2016 having held a number of senior positions in the national accountancy firms, seeing a gap in the market for a high quality, service focused advisory business. Advising across the range of tax matters relevant to the owner managed business. Craig particularly enjoys advising on complex reorganisations and reconstructions and developed a specialism in this area. Craig regularly writes in the tax press and presents to fellow professionals and clients. Craig is also the author of Tolley’s Tax Planning for OMBs and consultant editor for the OMB module on TolleyGuidance.

Powered by
  • 04 Dec 2024 17:31

Home/ Tolley Tax Guidance/ Owner-Managed Businesses / Exiting the business and succession planning

Popular Articles

Trusts and Inheritance Tax

Spouse exemption from inheritance tax

Spouse exemption from inheritance taxArguably, the most important inheritance tax exemption is the spouse exemption from inheritance tax.There is no IHT to pay on gifts from husband to wife and vice versa, or from one civil partner to the other (referred to collectively in this note as ‘spouses’).

14 Jul 2020 13:56 | Produced by Tolley in association with Emma Haley at Boodle Hatfield LLP Read more Read more
Owner-Managed Businesses

Relief for employee share schemes

Relief for employee share schemesRemuneration expenses are generally deductible for corporation tax purposes as they are considered to be incurred wholly and exclusively for the purposes of the trade. However, expenses relating to shares are usually classed as capital and are therefore not

14 Jul 2020 13:21 | Produced by Tolley Read more Read more
Employment Tax

Parking provision and expenses

Parking provision and expensesCar parking facilities at or near to the employee’s workplaceThere is an exemption from tax and NIC where an employer provides parking, or pays for or reimburses an employee for the costs associated with car parking at or near the place of work; there are no reporting

14 Jul 2020 11:09 | Produced by Tolley Read more Read more