Engaged and Motivated Workforce
By giving employees a stake in the company’s success, EOTs foster a deep sense of ownership and motivation, resulting in increased productivity, loyalty and commitment. Typically, EOTs have greater productivity and staff retention.
Legacy Preservation
Maintain the legacy and ethos of your business even after you step away. EOTs provide a mechanism to pass on the torch while ensuring your company’s values and purpose endure. Most businesses who become an EOT will not encounter future issues on succession planning. The EOT will continue to exist irrespective of the identity of the individual employees.
Tax Advantages
EOTs offer attractive tax incentives, including capital gains tax exemptions for owners selling a controlling interest to the trust, making the transition financially favourable. Employees can also earn up to £3,600 per annum tax free by way of the profit distribution mechanism. This profit distribution is also deductible from the company’s net profit, thereby reducing the Corporation tax liability of the business.
Stability and Sustainability
EOTs provide stability for your business, reducing the risk of external takeovers or disruptions. They encourage long-term decision-making, focusing on the welfare of employees and the organisation as a whole. It will not be necessary to buy out shares from exiting directors or employees. As a consequence, decision-making in the business is made for the good of all employees rather than a smaller number of shareholders.
Attracting Talent and Succession Planning
Employee ownership is an appealing proposition for talented individuals seeking meaningful work and a voice in the company’s direction. EOTs also offer a robust succession plan by nurturing and grooming internal talent for leadership positions.
