Benefits and drawbacks of EOTs for employee ownership.

Employee ownership trusts (EOTs), a type of employee benefit trust introduced by the UK government in 2014, have seen a surge in popularity with nearly 500 businesses established in this model in the year ending September 2022, according to data obtained by accounting firm Price Bailey. EOTs can offer benefits such as tax-free bonuses, higher staff retention rates, and a smoother sale process while allowing shareholders to receive a full capital gains tax exemption. However, they may not be suitable for every company as ownership is indirect and requires trust in the trustees, payment is spread over time, and valuation can be difficult.