Don’t get caught out by the Budget. Are you considering an Employee Ownership Trust (“EOT”) for your company?
Employee Ownership Trust Advisory
Sell your business on terms that protect its future, and pay significantly less tax doing it.
We guide UK business owners through every stage of an Employee Ownership Trust sale: feasibility, valuation, trust structuring, tax planning, and employee communication, backed by David Craddock’s direct working relationship with HMRC.
📞 Book a free initial consultation
What You Get
- Feasibility assessment, a clear answer on whether your business qualifies, before you commit to anything
- Independent, HMRC-defensible valuation, the price the trustees can properly pay, documented to withstand scrutiny
- Trust structuring and implementation, legal formation and trustee appointment, built to survive the four-year clawback window
- Tax planning and compliance, modelled against the 2026 rules, including the interaction with Business Asset Disposal Relief and any existing EMI arrangements
- Employee communication strategy, so your team understands what’s changing and why
- Ongoing governance support, keeping the trust compliant well after completion
Why Choose David Craddock as Your Employee Ownership Advisor
As one of the UK’s most experienced EOT advisors, David Craddock has over 35 years advising on employee share trust structures and serves as Technical Secretary to the Share Valuation Worked Examples Group, which meets quarterly with HMRC. That means the Employee Ownership Trust advice you get comes from someone who sits in the room where HMRC’s approach to these questions is actually set, not someone interpreting it from the outside.
The Tax Position Right Now
For disposals completed on or after 26 November 2025, 50% of the seller’s gain is exempt from Capital Gains Tax, an effective rate of around 12%. That’s roughly half the rate of a standard trade sale, at 24%.
On a £5 million gain, that’s the difference between paying around £1.2 million in tax on a trade sale, against £600,000 through an EOT: about £600,000 retained, before counting the value of continuity and tax-free employee bonuses afterwards.
Full breakdown and the earlier Budget rules →
Is This the Right Route for You?
An EOT tends to suit:
- Founders looking to retire without a clear buyer in place
- Family businesses with no obvious successor
- Owners who want to reward long-serving staff
- Companies that value long-term stability over a maximised sale price
It’s not the right fit for every business. Proceeds are usually paid over several years from company profits rather than as a lump sum, and the business must be a qualifying trading company with a majority stake available to sell. We’ll tell you honestly during the feasibility review if it isn’t a good match.
How We Work Together
1. Feasibility review
We start by establishing whether an EOT genuinely fits your business and your goals, not just whether it’s technically possible. This covers your trading status, your shareholding structure, and whether the business can realistically fund the transaction from future profits. If it isn’t the right route, we’ll tell you plainly at this stage, before either of us commits further time to it. Typically one to two weeks.
2. Independent valuation
An HMRC-defensible valuation of the business, prepared to the standard that will hold up under scrutiny from HMRC and from the trustees themselves, since they carry a legal duty not to overpay. This is the figure everything else in the transaction is built on. Usually two to three weeks, depending on the complexity of the business.
3. Trust structuring and trustee appointment
We put in place the legal and governance framework: forming the trust, appointing trustees, and setting out their powers and duties. This stage is built with the four-year clawback window in mind from the outset, so the structure holds up well beyond completion, not just on the day of signing.
4. Transaction financing
Working through how the sale is actually funded, most commonly from the company’s future profits over several years, and modelling what that means for cash flow, timing, and the seller’s expectations on when they’ll be paid.
5. Employee engagement
Communicating the change to your team in a way that explains what’s happening, why, and what it means for them day to day. Handled well, this is often the point where staff start to feel the benefit of the move, not just hear about it.
6. HMRC compliance sign-off
Preparing and submitting the clearance application to HMRC, with the supporting valuation and tax analysis behind it. David’s direct working relationship with HMRC through the Share Valuation Worked Examples Group means this process is grounded in how HMRC actually approaches these cases, not just how the legislation reads.
7. Ongoing governance
Once the trust is in place, it has to be run properly and kept compliant for the whole four-year qualifying period and beyond. We stay involved after completion, supporting trustees with their reporting duties, annual compliance, and any questions that arise as the business settles into its new structure.
Every business moves through these stages at a different pace. Some complete in a matter of months, others take longer where the structure is more complex. We’ll give you a realistic timeline once we understand your business at the feasibility stage.
Employee Ownership Trust: Your Questions Answered
What if my employees aren’t ready to take on more responsibility?
They don’t need to be, not immediately. Day-to-day management doesn’t have to change on the day of completion. Many businesses transition gradually, sometimes over several years, with the existing management team continuing to run things while the wider workforce adjusts to what employee ownership means in practice. We help you plan that pace as part of the process, rather than leaving it to chance.
What happens if my business doesn’t qualify for an EOT?
We’ll tell you honestly during the feasibility review, before you’ve committed significant time or cost to the idea. If an EOT isn’t the right fit, that’s a useful answer in itself, and we can point you toward other routes worth considering, whether that’s a trade sale, a management buyout, or restructuring the business first to make an EOT viable later.
Can I stay involved in the business after selling to the trust?
Yes. Many owners remain involved, whether in a leadership capacity, as a trustee, or simply as a director supporting the transition. An EOT sale doesn’t have to mean stepping away entirely. What matters is agreeing your role, and how it will evolve, as part of the planning process rather than after the fact.
Do I have to sell my entire shareholding?
No. Provided the trust acquires and retains more than 50% of the issued share capital, you can retain a minority stake and stay invested in the business’s future performance while gradually stepping back.
How is the sale actually funded, and when do I get paid?
Most EOT transactions are funded from the company’s future profits, paid to the seller over a period of years rather than as a single lump sum on completion. We model this in detail during the transaction financing stage, so you go into the sale with a realistic picture of when and how you’ll be paid, rather than a broad assumption.
Will my staff have to run the company through employee votes or committees?
No. An EOT doesn’t require an employee council, and most businesses that use one don’t have one. The trust holds a defined set of decision-making rights, agreed before completion, and day-to-day management continues to sit with the company’s leadership, not the trust.
What happens if something changes in the four years after completion?
The four-year period following completion is when your CGT relief remains conditional. If certain qualifying conditions aren’t maintained during that window, such as the trust’s controlling stake or the business’s trading status, the relief can be withdrawn. This is exactly why we build the trust structure and governance arrangements to hold up well beyond completion, and why we stay involved afterwards rather than stepping away once the deal is signed.
How much does this cost, and is the initial consultation really free?
Yes, the initial consultation is free and comes with no obligation. It’s a chance for us to understand your business and for you to understand whether this is the right route, before either of us commits to anything further. Fees for the full process depend on the complexity of your business and are agreed upfront once we’ve completed the feasibility review.
Start Your EOT Journey
👉 Book a consultation with our EOT specialists today
Want to understand the full mechanics first? Read our complete guide to Employee Ownership Trusts →
DAVID CRADDOCK CONSULTANCY SERVICES
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