Employee ownership trusts in the UK: statutory compliance, funding, valuation and governance pitfalls (including trustee independence), disqualifying events and employee incentives (2024–2025 reforms)

Published by a LexisNexis Share Incentives expert

Practice notes

What is an employee ownership trust?

An employee ownership trust (EOT) is a distinct type of employee benefit trust that must satisfy specific statutory conditions. The EOT framework was introduced by the Finance Act 2014, together with certain tax advantages available to companies owned by an EOT and to individuals who dispose of shares to an EOT. If those statutory tests are not met in relation to the EOT, these reliefs will not apply. For general information on EOTs, including an overview of the key features and tax reliefs, see Practice Note: Employee ownership trusts. For more on the issues and considerations when selling a company to an EOT, including the necessary documentation and the overall sale process, see Practice Note: Sale of a business to an employee ownership trust. For guidance on a sale by the trustees of an EOT of a company already held within that EOT, see Practice Note: Sale of a company out of an employee ownership trust.

What are the pitfalls?

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Ben Watson

TLT

Ben is Head of Employee Incentives at TLT. He specialises in all aspects of employee incentives and employee ownership and is an expert on all associated legal and tax matters. Ben has been advising companies and management on share scheme matters for more than twenty years. He has implemented arrangements for all types of companies, from start up to FTSE 100 and has led the advice on some of the UK’s largest and most recognised share plan and employee ownership matters. He has a wide understanding of the market and of the associated corporate governance issues. He is independently recognised as a leading individual nationally for employee share scheme matters and is ranked in Band 1 UK-wide for employee ownership matters, with clients describing him as “an expert in his field” and “very patient in explaining the legal jargon”....

Douglas Roberts

TLT

Douglas has over 23 years’ experience of advising on corporate legal matters including M&A, equity investments and corporate advisory work across a broad spectrum of clients, including SMEs, family businesses and start-ups. His general corporate experience spans a broad spectrum of sectors, including healthcare, technology, finance, retail, hospitality, engineering, energy supply and property.Douglas is recognised as one of Scotland’s leading solicitors on employee ownership, having assisted with more than 35 transitions to employee ownership. He has also acted for Capital for Colleagues plc regarding investments in employee owned companies.Further Douglas has developed a specialisation in sports law, acting for a number of sports clubs, governing bodies and individuals. He successfully represented clients in one of the highest profile sports law disputes in Scotland this century. Douglas worked in-house at the Glasgow 2014 Commonwealth Games regarding sponsorship,...

Web page updated on 21/05/2026

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