Is your employee-ownership trust run properly?
After a sale to an employee ownership trust (EOT), the trust must keep to eight rules, or the tax relief on the sale can be taken back. We check each one on your answers, including the trustee rules for sales from 30 October 2024, and say what to fix.
Your answer
Enter the date the shares were sold to the trust to see how well your trust is run.
About this calculator
For former owners, directors and trustees of a company sold to an employee ownership trust. After the sale, certain changes (disqualifying events, in the Taxation of Chargeable Gains Act 1992, section 236O) take back the tax relief the sellers had, if they happen in the first four tax years after the year of the sale. We check the eight of them one by one.
You type the answers: who the trustees are, how the staff share, and what the trust has paid out. We don't read the trust deed, Companies House or the company's records, so a rule shown as met is a first check only. "Linked to the former owners" is our plain version of the legal test, which is wider.
Bonuses aren't one of these rules: a bonus over the tax-free limit is just taxed as pay. Our tax-free bonus calculator checks those.
What happens to your answers
We don’t keep them. Your answers go to our server to do the sums and aren’t stored or logged. If you copy a link to your answers, they’re in the link itself, so only share it with people you trust.
How it’s worked out
Three rules are about the trustees and apply to sales from 30 October 2024: trustees linked to the former owners must be fewer than half, the former owners must not be able to make big decisions without a trustee who isn't linked to them, and every trustee must live in the UK for tax. For an earlier sale they show as not needed.
Five apply to every sale: the trust still owns more than half of the company, the company still mainly trades, all staff share on the same terms, owners and their close family are no more than two fifths of the staff as things stand today, and the trust has paid or lent nothing to former owners beyond the price. A not sure or empty answer leaves that rule not checked: we never guess.
In the example, 1 of 4 trustees is linked, fewer than half, and 3 of 25 staff (12%) are owners or family, under two fifths, so all 8 rules are met. The sale on 1 March 2025 was in the 2024 to 2025 tax year, so the rules must be kept until the end of the fourth tax year after it, 5 April 2029.
Worked example
On track: on your answers, all 8 rules that apply to your trust are met.
your answers taken as true · sold to the trust on 1 March 2025 · the trustee rules from 30 October 2024 apply · a company trustee counted as its directors · staff and owners counted as things stand today
| The date the shares were sold to the trust | 1 March 2025 |
|---|---|
| The trustee rules for sales from 30 October 2024 apply | Yes |
| Fewer than half of the trustees are linked to the former owners | Met |
| Former owners can't make big decisions without a trustee who isn't linked to them | Met |
| Every trustee lives in the UK for tax | Met |
| The trust still owns more than half of the company | Met |
| The company still mainly trades | Met |
| All staff share in the benefit on the same terms | Met |
| Owners and their close family are no more than two fifths of the staff | Met |
| The trust has paid or lent nothing to former owners or their family, apart from the price | Met |
| Rules met | 8 of 8 |
| Trustees with no link to the former owners | 75% |
| Keep to the rules until the end of the 4th tax year after the sale | 5 April 2029 |
Checked against the events that end the tax relief on a sale to an employee ownership trust (Taxation of Chargeable Gains Act 1992, section 236O), including the trustee rules for sales from 30 October 2024 (Finance Act 2025, Schedule 6), with the limits in sections 236LA, 236M and 236N. A first check on your answers, not legal or tax advice.
Questions people ask
What happens if a rule stops being met?
In the first four tax years after the year of the sale (one tax year, for a sale before 30 October 2024), the sellers' tax relief is taken back and the profit is taxed as if it had never been given. After that the trust itself is taxed as if it had sold its shares. Some breaks don't count if put right within 6 months, such as a trustee change caused by a death, or too many owners among the staff for reasons outside the trustees' control.
Can a former owner still be a trustee?
Yes. Former owners and people linked to them can be trustees, as long as they are fewer than half of the trustees and can't make big decisions without a trustee who isn't linked to them.
Do trustees have to hold meetings?
It isn't one of the rules. But trustees who meet and write down their decisions can show that the trust is run for the staff, so we list it as good practice. It never changes the answer.
Want to explore an EOT?
We’ll walk you through the basics. No pressure. No commitments.
- Free call
- Clear advice
- Real numbers
Takes 60 seconds. You’ve got nothing to lose.
