EOTs: A success to build on and protect

Key points

• The impact of changing behaviour through the introduction of a specific tax incentive can be seen with the introduction of employee ownership tax relief for vendors.
• The indirect employee share ownership (EOT) was modelled on the ownership structure of John Lewis.
• Employee ownership trusts and converting to indirect employee ownership to apply for that tax relief allows retiring entrepreneurs to preserve the independence and legacy of their business while cashing out.
• The 2014 EOT legislation has worked from the start without requiring any changes to the legislation although there are some areas for improvement.
• One alternative SPV might be a common ownership worker co-operative as proposed by Co-operatives UK.

One of the problems that advocates of the use of tax incentives to encourage economic growth face is that it can be quite hard to objectively demonstrate that a particular tax incentive is having a meaningful economic effect...