Employee Ownership Trust Disposals

Employee Ownership Trust Disposals

Employee ownership trust disposals refer to the sale or transfer of shares held in an employee ownership trust (EOT). EOTs are established to hold shares on behalf of employees, providing them with a stake in the company.

Disposals occur when these shares are sold or distributed, allowing employees to benefit from their ownership. At Thornton Jones, our commercial solicitors play a crucial role in facilitating employee ownership trust (EOT) disposals.

We provide legal expertise and guidance throughout the process, ensuring compliance with relevant laws and regulations. Our solicitors assist in drafting and reviewing contracts, negotiating terms, and advising on valuation and tax implications.

We help protect the interests of both the company and the employees, ensuring a fair and transparent transaction. Our solicitors can also provide advice on the establishment and ongoing management of EOTs, ensuring their compliance with trust law and regulatory requirements.

Our expertise and support contribute to a smooth and successful EOT disposal process for a range of businesses.

Our expertise with employee-owned trust disposals

At Thornton Jones, we have extensive expertise in navigating the legal intricacies of employee ownership trust (EOT) disposals. Our knowledge ensures a smooth and successful process, protecting the interests of both companies and employees.

Our commercial solicitor’s expertise with employee ownership trust disposals includes:

  • Legal advice and guidance on employee ownership trust (EOT) disposals
  • Drafting and reviewing contracts and agreements related to EOT disposals
  • Negotiating terms and conditions of EOT disposals
  • Conducting due diligence on the EOT and the company involved
  • Providing valuation services to determine the fair value of shares in the EOT
  • Advising on tax implications and structuring of the EOT disposal
  • Ensuring compliance with relevant laws, regulations, and trust requirements
  • Assisting with the documentation and paperwork required for EOT disposals
  • Representing clients in negotiations and discussions with other parties involved in the disposal
  • Offering ongoing support and advice for the establishment and management of EOTs.

Our employee ownership trust disposals fees

Our commercial solicitors aim to make our fees clear and competitive, ensuring you are aware of the likely costs from the outset.

Our commercial law solicitors’ hourly rates

Our corporate and commercial law solicitors charge between £190 and £250 per hour plus VAT for commercial work, depending on the level of expertise you need for your case and the complexity of the work involved.

Our legal assistants’ fees are between £100 and £145 per hour plus VAT. For our trainee solicitors and paralegals, the cost will be between £150 and £190 per hour, plus VAT.

We make sure that we bill in regular instalments, and we are able to agree monthly payment plans where required, with interest at 8% on outstanding balances.

All fees are subject to VAT.

For more information, see our fees and funding page.

Employee ownership trust disposals FAQs

What is an employee ownership trust (EOT) and how does it work?

An employee ownership trust (EOT) is a legal structure that allows employees to have a stake in a company. It is established by transferring shares to a trust, which holds the shares on behalf of the employees.

The trust becomes the legal owner, and the employees’ become beneficiaries, benefiting from dividends and potential capital gains.

The EOT model encourages employee engagement, fosters a sense of ownership, and aligns the interests of employees with the long-term success of the company.

The UK government provides tax incentives for companies adopting the EOT model, further promoting employee ownership.

What are the benefits of implementing an employee ownership trust for a company?

Implementing an employee ownership trust (EOT) offers several benefits for companies.

Firstly, it creates a positive and inclusive work environment by giving employees a stake in the business and fostering a sense of ownership.

This often leads to increased employee engagement, motivation, and productivity. EOTs can also aid in attracting and retaining talent, as employees see long-term career prospects and potential financial rewards.

EOTs can also provide a succession planning solution for business owners looking to exit, ensuring the continuity and legacy of the company. From a tax perspective, there are capital gains tax reliefs available for selling a controlling interest to an EOT.

How can employees benefit from an employee ownership trust disposal?

Employees can reap several benefits from an employee ownership trust (EOT) disposal.

Firstly, they have the potential to receive a financial windfall from the disposal, as their shares in the trust are sold or transferred. This can result in significant financial rewards and the opportunity to share in the company’s success.

The EOT disposal can also enhance job security, as the trust structure provides stability and a long-term commitment to employee ownership. Employees also gain a voice in decision-making processes, as they have a collective stake in the company’s direction.

How are employee ownership trust disposals different from other types of company sales or transfers?

Employee ownership trust (EOT) disposals differ from other types of company sales or transfers in significant ways. Firstly, EOT disposals prioritise the interests of employees as beneficiaries of the trust, ensuring their long-term benefit and participation in the company’s success.

Unlike traditional sales or transfers, EOT disposals aim to foster employee engagement and create a sense of ownership.

EOTs also offer unique tax advantages, such as capital gains tax relief for selling a controlling interest to the trust. This distinguishes them from conventional sales or transfers, which may not provide the same tax benefits or employee-centric focus.

What factors should a company consider before initiating an employee ownership trust disposal?

Before initiating an employee ownership trust (EOT) disposal, a company should consider several factors. Firstly, they need to assess whether the EOT aligns with their goals and values, as it entails a long-term commitment to employee ownership.

It’s crucial to evaluate the financial implications, including the valuation of shares and potential tax advantages. Considering the impact on company culture, employee engagement, and decision-making processes is also essential.

The feasibility of implementing and managing the EOT, as well as the potential impact on succession planning, should also be carefully evaluated. Seeking legal and financial advice can provide further clarity on these considerations.

What are the tax implications for both the company and the employees in an employee ownership trust disposal?

In an employee ownership trust (EOT) disposal, there are significant tax implications for both the company and the employees.

For the company, selling a controlling interest to an EOT can qualify for capital gains tax (CGT) reliefs, potentially resulting in a reduced tax liability.

Additionally, the company can claim a corporation tax deduction for the cost of the EOT shares. As for employees, they may benefit from receiving tax-free bonuses or distributions from the EOT, subject to certain limits and conditions.

It is crucial to seek professional tax advice to fully understand and optimise the tax implications in each specific situation.

Speak to our commercial solicitors in Garforth, Mapplewell, Ossett, Sherburn in Elmet and Wakefield today

For advice on employee ownership trusts, please contact our local offices in Garforth, Mapplewell, Ossett, Sherburn in Elmet or Wakefield.

Have a quick question or want to request a call back? Use our online enquiry form.

Contact Us

☎️ Call our Wakefield office on 01924 290 029
☎️ Call our Garforth office on 0113 246 4423
☎️ Call our Sherburn in Elmet office on 01977 350 500
☎️ Call our Mapplewell office on 01226 339 009
☎️ Call our Ossett office on 01924 586 466

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