EOT Positivity as eoa Begins Growth Strategy Development

Despite a pause in Employee Ownership Trust (EOT) deals due to a need for greater clarity on Capital Gains Tax (CGT) relief changes, positivity around the model and its impacts is in full flow. 

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This week, as we held the first meeting of the UK EO Growth Strategy Steering Group – taking stock of the current plan, where we are now, and how we’ll agree next steps – we look back at what’s taken place since the strategy was first announced alongside the Autumn Budget 2025 which reduced the EOT tax relief by 50%.  

Contrasting the disruption and pain many in mid-transition experienced, there’s been an abundance of positivity around the impact of the EOT and the long-term vision for its future from multiple sources.  

This echoes how the changes to CGT relief – and clarity on how they can be applied – are temporarily at odds with the strength of Government’s commitment to doubling the cooperatives and mutuals economy, which remains as strong as ever. 

Strong Backing & Impacts for the EOT 

Despite the disappointment and struggles of having EOT deals in limbo, our Specialist Advisors have been quick to share the model’s virtues and how the 50% CGT relief (e.g. 12% tax) still makes for a solid succession option. 

Internationally, we’re seeing agreement among other governments. Key policies following on from the introduction of the EOT in the UK, and the eoa’s work on developing the practices and ecosystem around, has seen similar policy and approaches being adopted in Ireland, Denmark, Canada, the US, and Australia.  

As the eoa and HMRC’s data shows, the CGT relief isn’t the only reason founders choose to sell to their employees, although it’s a primary factor in about half of cases.  

Evidence shows that in the majority of that 50% choosing an EOT, it’s quickly followed by securing jobs, with the business anchoring its values and independence in local regions.  

Our brilliant community of EO businesses have been busy celebrating and sharing these impacts and successes of how they’ve hit the sweet spot in their EO journey, where their hard work to grow an effective culture is driving positive results. 

From Ison Harrison recording its best trading year for thirty years and Coda hosting its very own EO conference, to S&W Wholesale recently marking three years as an EOT, during which time it’s paid £1.1 million in bonuses to their employee owners. 

Combining our data with bountiful case studies embodying these impacts has formed the basis of our ‘why’ behind the UK EO Growth Strategy:  

• For Employees – Better Work & Wellbeing: EO boosts engagement, influence, and satisfaction
• For Businesses – Stronger, More Resilient Firms: Employee impact drives business impact. EO businesses outperform peers in downturns and reinvest for growth.
• For Communities – Wealth Rooted Locally
• Succession through EO sustains SMEs and stabilises essential services
• For the UK Economy – Inclusive, Long-Term Growth

However, what’s clear from this week’s Steering Group meeting is that while we establish more insights and how and why we choose our first sector to focus on, the efforts to push for improved a legislative framework that’s clear and accessible to anyone considering or advising on EO is essential.  

Hope on Completion of EOT Deals 

As we seek clarity in how to apply these changes, this will relieve the short-term pains being experienced mid-deal. There’s hope, as always, from our advisors and from businesses sharing insights that help us to show worked examples as well as the appetite to still pursue employee ownership via the EOT. 

We are delighted to note that we are starting to see some of the first transitions take place post-Budget, with our Specialist Advisor Baxendale Employee Ownership completing its first deal with a client in time for Valentine’s Day.   

Others such as Gusto remain committed to transitioning to an EOT with a huge commitment to building Great EO practices. In line with its long-term, values-driven approach, the business cites the broader benefits of EO – including cultural continuity, shared success, and safeguarding its future – as outweighing any changes posed by the relief changes. 

Others are having to delay in the wake of the relief changes, but one anonymous founder has shared: 

“We have delayed our transaction into the next tax year (provisionally June now) to allow more cash to build up in the business and allow higher up-front payments to make provision for the CGT.  

“It is a big change to the plans we had invested a lot of money in already, to get taxed 50% on their first deferred considerations via the EOT. But ultimately, we have still decided to proceed.” 

Next Steps 

The eoa is continuing to influence policymakers to push for clearer guidance on the tax changes to reduce uncertainty for those that are mid-deal or considering EO.  

The UK EO Growth Strategy Steering Group is using its collective expertise combined with data analysis to select the first target sector.