Were You Considering an EOT – But Now Questioning Other Options?

Here’s What You Need to Know – And Why It’s Still Worth a Conversation

If you’re a business owner thinking about an exit in the next few years, you’ve probably heard plenty of talk about Employee Ownership Trusts (EOTs). They became a popular option for founders who wanted to protect what they’ve built, look after their teams, and ensure the business carried on in the same spirit once they’d stepped back.

But as you know, nothing in the tax world stays the same for long. Following the 2025 Autumn Budget, the rules have shifted. The former 100% Capital Gains Tax (CGT) exemption on EOT sales has now been replaced with 50% relief. That means half your gain remains tax free, and the other half is taxable at today’s CGT rate.

So yes. the headlines have changed.

But does that mean the EOT route is no longer worth considering? Not at all.

The Questions Many Business Owners Are Asking Right Now

• “Is an EOT still the right route for me?”
• “Are there now stronger alternatives?”
• “How do I make sense of this properly?”

If you’ve found yourself asking the same things, you’re not alone. Many owners are stepping back and reassessing their options, and that’s exactly the right thing to do.

What the New Tax Position Really Means

With the revised rules, half of the gain on a qualifying EOT sale remains exempt. The remaining 50% is taxable at the current CGT rate of 24% (for higher-rate taxpayers). Here’s how that plays out in practice.

If you sold your business and made a gain of £2 million:

• £1,000,000 qualifying for EOT relief → £0 tax
• £1,000,000 taxed at 24% → £240,000 tax payable

If the same sale wasn’t to an EOT:

• £1,000,000 taxed at 14% with BADR → £140,000
• £1,000,000 taxed at 24% → £240,000
  Total tax without an EOT: £380,000
  Total tax with an EOT: £240,000

  Tax saved: £140,000

Note: tax rates depend on many factors and individual circumstances – the above is offered as a guide only and proper tax advice should be sought before making any decisions.

Even with the updated rules, the EOT tax advantage remains meaningful (on paper at least); and on larger deals, the difference becomes even more significant.

What Exactly Is an EOT? (In Plain English)

An Employee Ownership Trust allows your employees to collectively own the business through a trust. Instead of selling to a competitor or private equity fund, you sell to people who already know and value the company – your own team.

The trust acquires your shares, the culture you’ve nurtured stays intact, and the business continues with the same ethos. Many business owners remain for a transition period, ensuring stability. Because the deal is typically funded from future profits, EOTs work best for companies that are consistently profitable with a strong leadership team already in place.

In essence: it’s an exit built around people, continuity, and stewardship. The tax relief is now a benefit, not the main driver.

Why EOTs Still Make Sense for Many Business Owners

Even with the altered tax position, the core appeal of EOTs hasn’t disappeared.

For many owners, this route aligns with what matters most at this stage of their journey: preserving the culture they’ve built, ensuring loyal staff share in the success, and avoiding a sale that risks breaking apart the identity of the business.

EOTs also tend to provide a more predictable and less pressured exit than competitive trade or private equity processes. And because employee-owned companies often see higher engagement and better long-term performance, an EOT can strengthen the business rather than disrupt it.

The relief may be smaller, but the strategic advantages remain strong.

So Why Are Some Business Owners Taking Another Look?

The Budget has prompted many to pause and re-evaluate their plans. EOTs are typically paid out over 5 years from ongoing profits, meaning they can be riskier for the shareholders than a traditional trade sale. The tax relief used to be a strong incentive to accept this risk, but that has now reduced significantly. Common questions include:

• How does an EOT now compare financially with a trade sale?
• Could private equity offer a bigger eventual upside?
• Is my senior team ready to take on greater responsibility?
• Would a hybrid or staged approach provide a better balance?

These are sensible questions. But it’s worth remembering that the strongest EOT exits were never just about tax – they were about people, transition, and long-term vision.

So… Is an EOT Still Right for You?

That depends entirely on your priorities.

If you value continuity, culture, and a phased exit that rewards your team, an EOT may still be the right fit. If your drivers are maximising net proceeds, creating competitive tension, or achieving strategic synergies, another exit route may now deliver a stronger financial result.

There isn’t a single “correct” answer – only the right one for your business and your future plans.

What Are the Alternatives to an EOT?

Depending on your goals, one of these might suit you better:

• Trade Sale – Often delivers the highest valuation where strategic buyers see strong synergy.
• Private Equity – Allows you to de-risk now while retaining upside for a second exit event.
• Management Buyout (MBO) – Works well if you have a capable, committed leadership team.
• Partial Sale or Capital Raise – Ideal if you want to release value without fully stepping away.

At Entrepreneurs Hub, we help you evaluate all these routes – not just EOTs – so you can move forward with clarity and confidence.

For deeper insight, see our blog “Choosing the Right Exit Strategy for Your Business” and download our guide SELL – Prepare Your Business for Sale.

Explore the Best Post-Budget Exit Strategy for You

With the tax landscape shifting, it’s natural for business owners to rethink their plans. The key is not to navigate this alone, but to explore your options with an advisory team who understands the full spectrum of exit strategies – EOTs included.

At Entrepreneurs Hub, we’re supporting owners every day who are reassessing their next steps. We can help you:

• Understand the commercial impact of the tax changes
• Compare each exit route side-by-side
• Model what you personally would walk away with
• Assess leadership readiness and succession
• Build a clear 1–3 year roadmap aligned to your goals

Most importantly, we help you choose the path that fits your objectives – not the one that simply appears fashionable.

If you were considering an EOT but are now uncertain, Get in Touch. A confidential conversation with one of our Directors will give you the clarity you need to move forward with confidence.