What key considerations must be taken into account when a firm moves to employee ownership? It is very important that there are key employees who understand and appreciate the EOT concept and want to get involved as trustees or directors to help lead the business into the future. An invariable part of the move to employee ownership is that employees are stepping up into greater levels of leadership and responsibility and will be fundamental in the future growth and success of the business. How did these considerations manifest during this operation, and did any complications or obstacles arise during the course of your work? Nigel and his team at Herd had worked very Can you tell us more about the tasks you undertook during the move? The key aspects initially were making sure the stakeholders understood the concept of an EOT, and what it meant for them personally, but also for the employees both now and into the future. There are some great tax benefits both for the selling shareholders and for the employees in being EOT-owned. The selling shareholders do not pay any tax on the disposal of a controlling interest in a trading company to an EOT, and employees can be paid a tax free bonus of up to £3,600 per annum by a business held by a qualifying EOT. However, setting aside the tax, it is vital that such a big move is done for the right reasons and that it suits the business. Having established this, there are a number of technical considerations to check in terms of the rules relating to EOTs, and seeking HM Revenue and Customs tax clearance is an important part of the project. Lawyer Monthly had the pleasure to speak with Kate Naylor at Sagars Accountants Ltd to give us some further insight into this transaction: It is very important that there are key employees who understand and appreciate the EOT concept and want to get involved as trustees or directors to help lead the business into the future.
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