The Tax Considerations on the sale to an EOT from 26th November 2025.

Subject to meeting the qualifying conditions, sellers can dispose of a controlling interest to an EOT and obtain 50% relief on the Capital Gains Tax (CGT) due.

Worked CGT example – for an assumed sale completing on or after 6 April 2026

To illustrate the potential tax effect, here is a simplified comparison. We assume:

•   the seller qualifies for Business Asset Disposal Relief (BADR) on the first
•   £1,000,000 of lifetime gains
•   the BADR rate is 18% from 6th April 2026
•   the CGT Relief for EOTs is 50% from 26th November 2025
•   standard CGT on share disposals is 24% for individuals; and the Annual Exempt Amount is £3,000. (See sources at the end)
•  Assume in this example that there is a base cost of £500,000.

The tax consequences

• Proceeds £5,000,000. Base cost £500,000 Gain = £4,500,000.
• 50% EOT Relief £2,250,000, less annual allowance of £3,000 = £2,247,000.
• £2,247,000 @24%( there being no Business Asset Disposal Relief (BADR) = £539,280.
• Using these assumptions, selling to an EOT results in approximately £480,000 les CGT compared to a standard disposal, even allowing for BADR.
• Please note: actual outcomes depend on personal allowances, relief availability, timing, and transaction specifics. Please take professional advice to understand your own circumstances.

The company can award tax‑free bonuses to qualifying employees each year up to a statutory limit, provided the rules are followed.

Directors’ remuneration and any post‑sale incentives should remain market‑based and properly documented.