Employee Ownership Trusts (EOTs) are a Government initiative aimed to promote employee ownership by giving business owners the opportunity to sell their shares to an employee owned trust free from capital gains tax. EOTs do not involve direct share ownership by employees, rather a controlling interest in company is transferred to an all-employee trust which is then held for the benefit of employees.
On setting up an EOT, funding will be required in order to allow the purchase of shares from the existing owners. The vendor will often be paid for their shares out of future income generated by the Company.
PwC can assist with all aspects of the implementation of an Employee Ownership Trust.
We will advise on ensuring that an EOT is the best option for the company and outline the key considerations taking into account potential alternative structures.
EOT design and tax structuring
We will work with the company and owner(s) so that the Company can have the confidence that the beneficial tax treatment will apply.
We will provide a robust and fair valuation of the company. This is to ensure that no additional tax charges arise as a result of the shares being sold at an overvalue and so that the trustees can be confident they are acting in accordance with their obligations.
We will assist with the production of communication materials to employees to ensure that they understand and appreciate the benefits to them of the move to EOT status.
We can prepare the necessary share transfer and trust documentation to ensure the transfers occur in accordance with the legislation so that the beneficial tax treatment applies and so that the trustees can be confident they are acting in accordance with their obligations.