How much Capital Gains Tax will I pay if I sell my company to an EOT?

A qualifying sale to an EOT attracts 50% relief from Capital Gains Tax, which gives an effective CGT rate of 12% rather than the usual 24%.

For example, on a £2.5 million sale where the shares originally cost a negligible amount, the CGT on a qualifying EOT sale would be around £300,000. On a conventional third party sale — assuming Business Asset Disposal Relief was available on the first £1 million at 18%, with the balance at 24% — the bill would be around £540,000. The EOT route therefore saves approximately £240,000.

Although CGT is payable, the tax cost remains significantly lower than under most alternative sale structures. You can learn more about your Capital Gains Tax position when selling to an EOT on our blog.