Employee Ownership Trust offers a great way to ensure your company continues to thrive, even if you want to take a step back from full ownership.
Introduced in 2014, Employee Ownership Trust places the business into the ownership of its employees. It creates rooms for a smooth transition when the business owner is looking to sell.
Employee Ownership Trusts can be beneficial for employees and owners who are looking to sell off shares. Also, it can be a great option for startup businesses.
#1]. Secure the Future of Your Company
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Perhaps you’re wondering, what are the benefits of Employee Ownership Trusts? First, the great thing about an employee ownership trust is that it helps secure the future of your company.
Despite the fact that there is a change of ownership, you get a continuity that you don’t get with other takeovers.
The employees become the controlling owners, which allows things to carry on as normal. Often, when new owners come in, they can dismantle the culture that is fundamental to your company, and employees can suffer redundancies.
However, this is not the case with an employee ownership trust. The employees simply pick up where they left off, just with the added benefit of having a share in the ownership of the company.
#2]. Keep Previous Owner’s Experience
In many cases of Employee Ownership Trusts, the previous owners keep a percentage of the business. This can be extremely helpful for the transition to employee ownership and helps stable the ship while the company goes through a period of change.
If the previous owners have had a pivotal role in the success of the company, this allows the new owners to benefit from the expertise of the old owners and ensure the company continues to move in the right direction.
#3]. Increasing Employee Engagement
What better way to increase employee engagement than by giving them a share in the profits? Owning a part of the business can really boost an employee’s connection with the business, improving engagement and retainment levels at this vital time. You might be taking a step back from the business, but your company can still benefit from some extra employee engagement.
#4]. Attract New Talent
An employee-owned business can be a huge attraction for many of the most talented workers in your field. Employee Ownership Trusts give employees a say in how their company is run, and they also get to share in the profits.
These benefits can put a company ahead of its competitors when it comes to recruiting the best talent.
#5]. A Great Way to Step Back from Ownership
Not only does an Employee Ownership Trust ensure continuity for the business, but it also gives you some financial advantages when you sell off your shares.
If your sale to an Employee Ownership Trust meets certain conditions, then you are not liable to pay Capital Gains Tax on the profits you make from the sale.
The financial benefits to an Employee Ownership Trust are there for you and your employees who can earn up to £3,600 tax-free under the scheme’s regulations.