Employee Ownership Trusts (EOTs) can benefit business owners and staff alike, despite recent tax changes.
From pastrymakers to architects, business owners across Scotland are turning to employee ownership as a way to manage succession planning. They see it as an opportunity to secure the success and culture of their business while making a tax-efficient exit.
Exit benefits
By transitioning control of their business to an EOT, retiring or exiting owners can transfer it to the people who probably know it best. There’s research showing that by offering the whole workforce a stake in the company’s future success, EOTs can improve productivity, staff retention, and profitability. Companies controlled by EOTs can also award annual tax-free bonuses of up to £3,600 a year for each employee.
Meanwhile, the exiting owner benefits from 50% Capital Gains Tax relief. Although in November 2025 this dropped from the previous 100% relief, it’s still potentially significantly less tax for the sellers compared with a conventional trade sale.
A tasty business legacy
One company that has recently chosen employee ownership is Cumbernauld pastry-making business William Sword. Explaining the decision, Douglas Sword, who has managed the company with his brother David for more than 40 years, said,
“The idea of a trade sale – which might ultimately have led to distant owners and jobs being put at risk – didn’t interest us.
Transitioning to an EOT is a model which has worked really well for others. It has benefits to us, but also to the staff, who are now in control of their own destiny. The business is in their hands now. We are sure they will continue to grow and be successful.”
