Marvin OnumonuChancellor Rachel Reeves has confirmed that from November 2025, the capital gains tax (CGT) relief on disposals to employee ownership trusts (EOTs) will be reduced from 100% to 50%.
Previously, company owners disposing of shares to EOT trustees received full CGT relief.
Under the new rules, half of the gains will now be chargeable and subject to CGT.
The Government estimates that these changes will raise £0.9bn a year on average from 2027-28 onwards.
There is also an expectation of a lower behavioural response from CGT taxpayers using EOTs for retirement purposes.
REACTION:
Christian Carr, partner at Spencer West LLP:
“Halving the capital gains tax relief on sales to employee ownership trusts will likely cool momentum in the short term.
“It raises founder tax costs, squeezes headroom for deferred consideration and is likely to bring seller price expectations closer to independent valuations.
“That said, EOTs remain a robust succession route for good businesses because they preserve culture, jobs and independence; it’s not just about the tax.
“The added advantage of creating your own buyer and softer due diligence remain unaffected.”
