So, you’re a business owner and you’ve set up an employee share scheme such as an Employee Management Incentive Plan (EMI), with pay-outs conditional on a sale of the company. You might ask yourself – what should I be saying about my plans to sell? The...
Since the Employee Ownership Trust (EOT) was introduced, we’ve spoken to hundreds of business owners about how EOTs work. Here are some of the common misconceptions we encounter and have hopefully corrected: 1. I won’t get full value. True, if you want to maximise your day one...
The First Tier Tribunal has ruled in the Esprit Logistics Management Ltd and others v HMRC [2018] case that director loan accounts written off were taxable as employment income of the directors, and subject to PAYE and NIC, rather than taxed as dividends where a...
A recent case in the high court gives some helpful pointers about decision making by trustees of employee benefit trusts (EBTs). This may be of particular interest to employees who have been appointed as trustees of an EBT or an Employee Ownership Trust (EOT) to...
Sorry, no punchline. But in the last three weeks, we’ve seen two very different companies make the move to employee ownership, demonstrating that the “John Lewis” model can work in any sector. In May, Kinetic plc, specialising in recruitment and payroll services, became employee owned by...
An often neglected consideration when structuring the financing for an Employee Ownership Trust ("EOT") transaction involves the concept of distributable reserves (“DR”). Simply put, distributable reserves are the accumulated earnings of the business over time, less any dividends paid. They may also be referred to...
One of the questions we get frequently from vendors is what percentage of the company’s shares should be sold to an Employee Ownership Trust (EOT). The answer will vary based upon the company profile and the vendors’ objectives. With only a few exceptions, our clients...
At the RM2 Partnership, we noticed that, as part of the recent Spring Statement, the government has decided (under the guise of a consultation process) to consider certain proposals that are likely to result in the introduction of legislation in Finance Bill 2018-2019. These proposals,...
We recently published an outline checklist for putting in place an employee share plan. Step one on that checklist is producing a blueprint for the design of the employee share plan. This is important not just to get the design of the employee share plan right...
One of the first questions we often get from business owners looking into potentially selling their company to an Employee Ownership Trust, or EOT, is how is the sale financed? This is an important question, as often the vendor is also looking at a third-party...
The number of Employee Ownership Trusts has increased to more than 150, according to the latest results from the national survey of EOTs, compiled by RM2 for the Employee Ownership Association. The current rate of growth in EOTs is 50% per annum, reflecting keen interest from...
It is noticeable that, while almost all the tax-advantaged share plans (CSOP, SIP and SAYE) and “Employee Ownership Trust” (EOT) arrangements make reference to “trading activities” (in the context of the scope of appropriate activities of a relevant company), it is only the Enterprise Management...
As part of the Chancellor’s 2014 budget, a new form of Employee Benefit Trust was created: the Employee Ownership Trust. These trusts were created to help facilitate the creation of stable, long term, employee owned companies. To assist with this, the trusts benefit from two key...
A question that has been raised with RM2 a number of times in the context of structuring vendor-funded Employee Ownership Trust (EOT) transactions is whether the better structure for a vendor would be for the vendor as part of their consideration (i.e. the purchase price)...
Hopefully that headline has grabbed your attention, because for some this is a controversial topic. Clearly, the aim of the Employee Ownership Trust (EOT) legislation is to encourage more broad-based employee trust ownership of UK businesses, and with that normally comes a healthy injection of employee...
