Guidance on responding to the government’s EOT & EBT consultation

There’s still time to respond to the government consultation on Employee Ownership Trusts and Employee Benefit Trusts. You can use the information and guidance below to help you complete your response. Don’t forget to let us know if you are submitting a response.

About the Employee Trusts consultation

The consultation closes on 25 September 2023. The questions seek your insight on a number of topics, including: 

  • A government proposal to require that former owners and connected persons do not have majority control of an EOT board. 
  • Whether additional requirements should be made on the composition of EOT boards (i.e. whether employee and/or independent trustees should be required). 
  • A government proposal to make it impossible to set up an offshore EOT in future. 
  • Two government proposals aimed to reduce clearances that must be sought from HMRC. 
  • A government proposal on changes to the rules around employee bonuses, with the intention of making these easier to administer.
  • Whether any other changes could be made to EOT tax regimes to better support employee ownership. 

You can find out more about the consultation on this blog post, and on the government website. 

Why you should respond to the consultation

Given the vital role that EOTs have had in the growth of employee ownership across the UK in the last decade, we want to ensure that the government understands and acts upon the views of the sector. So, as well as submitting our own response later this month, we want to support our members in getting their views across. 

We’ve drafted a suggested response template for members wishing to respond to the section of the consultation concerning EOTs. You can use this as a starting point, consider the suggested answers, whether these reflect your own experience of EOTs, edit as appropriate and then drop into your organisation’s letterhead formats to submit to HMRC. You can find out how to submit a response via letter or email here. 

The EOA’s response guidance has been formulated in collaboration with EOA members and advisors.

About our suggested response

Our suggested response is based on the views and input that we have gathered from engaging with our member and advisor network over the past year, including at our roundtable on EOTs on 27 June 2023. We would particularly like to thank our EOA Specialist Advisors Baxendale, Co-ownership Solutions, Fieldfisher and RM2 Partnership for their contributions. 

In many cases, there has been general agreement across members and advisors on the issues in the consultation. However, there will always be some diversity of opinion. We therefore strongly advise that members using this suggested response review it carefully, to ensure that it reflects your own views and as far as possible to add your own experience as an employee owned business.  

We recommend members particularly pay attention to the suggested response to the following questions, which would particularly benefit from employee owned businesses bringing their individual experiences and perspectives: 

  • Question 2: Should the government go further and require that the EOT trustee board includes persons drawn from specific groups, such as employees or independent persons? If so, how should these groups be defined? 
  • Question 8: In addition to the reforms proposed at Chapters 4 to 6, do you have any views on ways the EOT tax regimes could be reformed to better support employee ownership? 

Please note that the suggested response contains some notes for members to consider. These are highlighted in yellow, and close attention should be paid to ensure that these are all removed before sending. 

We invite members to let us know if they’re responding and share their responses with us, particularly if these are different to the suggested response. This will help the EOA to continue to understand and advocate on behalf of our members’ interests. The EOA full response is here

If you are submitting a response to the consultation, please drop us a line to let us know. Email Sam Blakeborough, Policy & Partnerships Officer at the EOA.

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