Increasing numbers of businesses are reaping the benefits of selling to their employees. So how exactly do these transactions take place – and what are the advantages and challenges of making such an exchange?
Once a company has satisfied the requirements of the specific EOT legislation, there are other tax provisions for companies, selling shareholders and their advisers.
Sales into the trust can be made free from capital gains tax and inheritance tax, and the EOT can pay annual bonuses of up to £3,600 to employees, free of income tax.

So how exactly do companies access the EOT route? In a nutshell, employers can sell a minimum of a controlled interest in a company to the trust: from 51% to 100% of shares.

From the selling shareholders’ perspective, there is a bit more of a risk because if you are selling the business to your employees, they’re going to pay you over seven years out of retained profits. If the business takes a downturn, I might not get all the money albeit interest can be added to the outstanding loan amount.

It is not a decision to be taken lightly as there is a lot of hoops to jump through but if you are interested to know more please do not hesitate to contact us.