An employee ownership trust (commonly called an EOT) is an ownership structure for private companies introduced by legislation in 2014 which offers generous tax benefits where companies are owned by their employees.

As well as enabling the incentivisation and engagement of employees and providing the benefits of employee ownership not just for the employees but also for the business and the wider economy, EOTs also offer significant tax advantages both to employees and to existing shareholders.

How does an EOT structure work?

Under an EOT scheme, the existing shareholders of a company sell a controlling stake in the business (at least 51%) to a newly established trust (the employee ownership trust) which then holds the shares for the benefit of the company’s employees.

The employee ownership trust is often established with a sole corporate trustee which may be a subsidiary of the trading company with a mixture of independent and internal trustee directors, or it may be established with an independent professional trustee.

What are the tax advantages?

Whilst BBS Law are not tax advisers and would recommend that anyone interested in the detail of the tax advantages of an EOT seek specialist advice in this respect, we would note the following as a high-level summary:

  1. A sale of shares to an EOT is free from Capital Gains Tax so any consideration paid to the selling shareholders is receivable by them in full.
  2. Contributions from the trading company to the EOT once it holds the shares can be made on a tax-free basis.
  3. Employees of the company are entitled to receive annual bonus payments (up to a capped amount) from the EOT which will be free from Income Tax.

Who might benefit from using an EOT structure?

As well as businesses looking to incentivise their employees and keen to move to a shared-ownership structure, EOTs may also be attractive to controlling shareholders looking for an exit which does not involve a sale to a third party, and which also allows them to reward the existing employees of the company.

There are a number of criteria which need to be met for a company to utilise an EOT scheme and we would recommend that anyone interested in finding out more about this type of structure seek specialist advice in this respect.

How can BBS Law help?

Here at BBS Law, we have assisted a number of clients in the sale of their businesses to EOTs and have considerable experience in the legal issues which commonly arise on the implementation of an EOT structure, and the preparation of the legal documentation required in this respect.

We work in a collaborative manner with the tax advisers on the transaction to ensure that the scheme is implemented in accordance with the tax legislation and also offer practical commercial advice to clients in terms of the operation of the business once this is owned by the EOT.

We advise from the start to the finish of the transaction and offer a commercial and client-led service on a fixed fee basis.

Note: This guide is for general information purposes only. If you require any further information or have a specific query you can contact our Corporate team. Our Partner, Dov Black ( will be happy to assist.

The inclusion of a few words in a property contract can ensure that the buyer receives the benefit of implied covenants under the Law of Property (Miscellaneous Provisions) Act 1994. The phrase, ‘The Seller sells with a full title guarantee’ indicates that the Buyer will be able to rely on all the covenants implied under the Act. But if the Seller only offers “limited title guarantee’, the Buyer would get only a lesser level of assurance. In some cases, the Seller may state that it does not give any guarantee.


When you are selling your property, or someone is selling to you, with Full Title Guarantee the following is implied:

  1. That the person selling has the right to sell the
  2. That the Seller will, at their own cost, do all that they reasonably can do to ensure the buyer will acquire a good title to the
  3. If the property which is being sold is registered, then it is presumed that the whole of that property in the registered title is being disposed
  4. If the property being sold is a leasehold property additional covenants are implied, which are, that the lease is still in existence and the Seller has complied with all the terms of the
  5. If the property being sold is unregistered then it is presumed that the interest being sold is the freehold. If it is clear that the property being sold is leasehold then it is presumed that the interest being sold is the unexpired term of the
  6. The person is selling the property free from all mortgages and all other rights and interests which may be exercisable by a third party other than those which the seller does not and could not reasonably be expected to know


This is used where the Seller of the property has no personal knowledge of the property. This is most often used in the case of a sale by an Attorney, the Executor of an Estate, where the property has been repossessed or by a Trustees or a Personal Representative.

The person selling cannot guarantee that the property is not subject to any financial charges, nor can they guarantee whether there are any rights over the property or give information on what rights there could be. They are unable to confirm whether there are any covenants which may affect the property.


Receivers or mortgagees selling a property following repossession usually have little or no knowledge of the property being sold and it is normal for them to give no title guarantee. The danger is that there may be something that the Buyer cannot discover on an investigation of title that the Seller has not told him about (for example, an overriding interest). If this happens, the Buyer has no recourse against the Seller.

A thorough investigation of title is essential before an auction or private treaty purchase circumstances where only limited or no title guarantee is offered to decide whether the Buyer should take out defective title insurance or whether there are any incurable title defects.

Note: This guide is for general information purposes only. If you require any further information or have a specific query you can contact our Property Team. Our Partners, Daniel Berger ( and Avi Barr ( will be happy to assist.