EOTs gain traction with succession and productivity gains: BDO

BDO Share Plans and Incentives nationalist caput Matthew Emms said that worker ownership trusts (EOTs) person experienced accelerated maturation successful popularity successful caller years.

He noted that this summation is owed to their relation successful supporting succession and exit readying for founders, arsenic good arsenic delivering benefits to businesses done enhanced worker engagement, retention, and productivity outcomes aligned with the archetypal aims of EOTs.

The UK authorities reduced the statutory superior gains taxation alleviation from 100% to 50% for shareholders selling to EOTs.

This alteration alters the incentives for concern owners considering worker ownership models, affecting succession readying and stock disposal strategies.

Introduced to summation worker engagement and widen stock ownership among staff, EOTs antecedently allowed owners to merchantability shares without incurring immoderate superior gains tax.

From precocious 2025, lone fractional of the summation realised from these disposals volition suffice for taxation relief.

Emms said: “Following a Government reappraisal past year, sensible and wide requested reforms were introduced astatine the past Budget to guarantee that caller EOTs are structured successful specified a mode that they clasp the tone arsenic good arsenic the missive of the instrumentality – and successful enactment with bully firm governance.

He added: “As these latest changes instrumentality effect immediately, they volition beryllium peculiarly problematic and unfair for those shareholders that were successful the process of selling their concern to an EOT – oregon who person had conversations with their employees astir selling their concern to them – but haven’t yet completed the transaction connected the ground that a cardinal commercialized word has present been changed.

“It would person been overmuch amended if the Government had consulted connected these proposals earlier they took effect successful the mode successful which they did with the erstwhile changes successful 2023.”

It was noted that, based connected their experience, concern owners appreciated the accidental to merchantability to an EOT, arsenic galore were genuinely funny successful transitioning their concern to an employee-owned model.

There was a interest expressed that the caller changes could trim enthusiasm for EOTs, though it was emphasised that EOTs would proceed to connection important benefits for some selling shareholders and employees.

Alongside adjustments to EOT rules, the authorities has announced changes to endeavor absorption inducement (EMI) stock enactment schemes.

Effective April 2026, eligibility criteria volition beryllium widened and the maximum fig of employees permitted nether EMI volition treble from 250 to 500.

Asset thresholds volition emergence from £30m ($39.68m) to £120m.