Budget 2025: Employee Ownership Trusts

An employee trust is a trust which is set up for the benefit of the employees or office holders of a company or group of companies. Such trusts are often referred to as Employee Benefit Trusts (EBTs) for tax purposes. EBTs may be set up for a range of purposes, for example to reward and motivate key employees through share ownership or to provide employees with benefits such as health cover.

An Employee Ownership Trust (EOT) is a specific type of EBT whereby the trustees own the company, and exercise control of the company for the benefit of all the employees. EOTs are given tax-favoured treatment through tax reliefs which were introduced in 2014 (PDF).

In the 2025 Budget the government announced that tax relief on qualifying disposals to EOTs would be cut from 100% of the gain to 50%, with immediate effect. Provision to this effect is included in the Finance Act 2026 (specifically section 35).