Employee Ownership, the Impact Economy, and the eoa’s Response to Government Call for Evidence

The eoa has submitted a final response to the government’s call for evidence on business support for mutuals.

Image: Richie Chan

This week, we’ve submitted to the Department for Business and Trade’s call for evidence on business support for mutuals (which includes employee ownership).

This is a once in a parliament opportunity to make the collective voice of employee ownership heard. 

It’s been fantastic to celebrate our members, Great EO and the impacts it delivers via a review of the most up-to-date evidence - including the EO Knowledge Programme, data from the eoa and White Rose Employee Ownership Centre’s EOBR, and analysis around our EO Growth Strategy.

Moreover, the call for evidence gives context for why employee ownership is such a glaring omission from the ‘Impact UK’ report - more on which below.

The submission follows a collaborative consultation process with members. This included seeking the insights and views of our Specialist Advisors and advisor members and distributing an early draft with members who were invited to share their feedback. All of this has informed our final submission to Government.

It also represents the culmination of a variety of eoa efforts, most recently our involvement on the Mutual and Co-operative Sector Business Council (MCSBC), which acts as a conduit between the mutual and co-operative sector and Government.

Keep reading for an overview of the key issues raised in our response or download the final submission in full by clicking or tapping here. 

The submission can also be found in the eo Hub, where you can discuss the issues and potential impacts with fellow members.

Key Issues Raised in our Response

Employee ownership delivers productivity, resilience, and workforce benefits, but growth is being held back by low awareness and rising complexity in the Employee Ownership Trust (EOT) system. 

Our final submission calls on Government to update HMRC guidance, simplify EOT rules, and clarify Capital Gains Tax (CGT) instalments and disqualifying‑event risks. Mainstream business support and financial institutions also need better EO understanding and signposting. Targeted feasibility funding, lending or guarantees - especially in capital‑intensive sectors – would reduce friction, while small legislative tweaks would enable EOTs to integrate with share plans and build workforce wealth. 

Going further, the key issues raised within our final submission focus on needing greater clarity around the CGT changes introduced in the 2025 Autumn Budget.

Formal guidance from HMRC would help to reduce uncertainty for any business owners considering a transition to employee ownership, as well as raising a broader awareness of EO as a succession tool.

The changes to CGT relief on EOTs have introduced new tax liabilities, clawback risks, and ambiguity – particularly around instalment relief – without updated HMRC guidance. The result could be a slowdown of EO transitions.

Furthermore, awareness remains the biggest barrier to growth. Many business leaders, employees, advisers, and financial institutions still lack understanding of EO. 

Success stories exist, but they’re not widely profiled through mainstream business support channels. These channels need to integrate a knowledge and awareness of EO, signposting to trusted information sources, basic ‘EO explorer’ guidance, and clear referral pathways.

Where finance is concerned, it’s due to a structural challenge. Lenders’ unfamiliarity with EOT structures creates friction in KYC processes, ownership checks, and lending norms such as personal guarantees. Asset‑heavy sectors face additional difficulties when competing with third‑party buyers offering higher valuations.

EO Omitted from Impact Economy

Coinciding with the final preparations of our submission was the publication of NPC’s ‘Impact UK’ report, which estimates the value of the UK’s ‘impact economy’ at £428 billion. 

Despite this substantial scope, the report omits employee ownership, co-operatives, and building societies from its definition of impact economy activity. We feel ownership as a lens has been overlooked as a driver of impact. 

As outlined throughout our response to the call for evidence, EO delivers impacts through three channels that are widely recognised as core components of the impact economy:

• Enhanced workforce wellbeing and equity
• Stronger, more resilient business performance
• Broader contributions to local and national economic health

The omission of EO therefore reflects a limitation in the report’s underlying understanding of mutual and employee owned business models. 

As a result, key evidence – such as the sector’s strong performance data or the role of EO in succession, resilience, and inclusive growth – appears not to have been meaningfully considered.

We welcome NPC’s acknowledgement that the report is a starting point rather than a definitive statement. 

To ensure future work reflects the full breadth of the UK’s impact economy, we’re inviting NPC - alongside our partners in the mutuals and co-operatives space - to engage more deeply with employee ownership and the wider mutuals sector. 

Including EO within the impact economy is essential for recognition and for ensuring Government policy fully captures and supports one of the UK’s most effective, evidence-based models for delivering economic and social impact.