Business owners: Could an employee trust provide you with an exit strategy?
High street toy shop The Entertainer revealed that it has transferred 100% ownership of the family-owned business to an employee trust. As a business owner, if you’re considering exit strategies, an Employee Ownership Trust (EOT) could be an option worth exploring.
An EOT is a government-backed structure that allows business owners to sell a controlling stake of their company to a trust for the benefit of all employees. As a result, the employees get a share of the profits and a say in how the firm is run.
As the business owner, you can choose to remain involved in the company if desired. You might choose to be a director, minority shareholder, or continue working full-time within the business until you’re ready to move on.
EOTs have been promoted by the government since 2012. Yet, they might be an option you overlook as a business owner, and you might miss out on certain tax advantages as a result.
Selling shares to an Employee Ownership Trust could reduce your tax bill
Typically, Capital Gains Tax (CGT) is payable when you sell shares in your business. However, if you sell them to an EOT, no CGT will be due. This makes it a tax-efficient way to exit your business.
An Employee Ownership Trust could help you create a legacy
An EOT could also be a valuable option if you don’t have a family successor to leave your business to, but you still wish to create a lasting legacy.
You might appreciate that your business will continue running even after you step away, and that your employees will remain in their roles.
According to an August 2025 article from the BBC, one of the reasons Gary Grant, founder of The Entertainer, chose the EOT route was because his children had other plans. He believes the move will preserve the family’s legacy while retaining the family feel of the business.
The drawbacks to consider before choosing an Employee Ownership Trust
If an EOT sounds like an exit strategy you want to explore, there are some drawbacks to consider first.
An EOT can be complex to set up, and certain conditions must be met to qualify for a tax break.
In addition, you’ll usually be paid from future profits over several years, so it may take longer to receive your proceeds compared with other exit options, such as selling your business to another person or company.
As a result, you might want to consider what your financial needs will be when you exit the business.
A financial plan could help you with this. By setting out your plans once you exit the business, you can calculate what is “enough” and what other assets you could use to generate an income to support your lifestyle. We can help you have confidence in your long-term security.
We can also work with you to create a long-term plan for using the money you receive from your business in a way that aligns with your goals, whether that’s investing for long-term growth or gifting assets to your loved ones now.
Contact us to talk about your financial plan
As a business owner, your finances might be complex, but we can help you develop a tailored financial plan that reflects your goals, including offering support when you decide to exit your business. Please contact us to arrange a meeting with our team.
Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
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