EMPLOYEE OWNERSHIP TRUST

ownership remains in the hands of the employees, who are more likely to be committed to preserving the company’s core values.

For some businesses, like Sheffield air conditioning experts Airmaster, the culture at the company already reflected the essence of what EOT models try to promote, and this was something they didn’t want to lose in a buyout scenario. After they transitioned in July 2021, managing director Lisa Pogson explained why the move seemed like a good fit for them.

“Airmaster is a family-feel business with a close-knit team; the ethos of employee ownership was already there. People in our team are passionate and keen to take it forward as a business.

We had the option of being bought out, but it felt like the ethos wouldn’t have stayed the same.”

On a financial note, a big plus of switching to this model is the tax benefits offered to both businesses and employees. For example, companies that are majorityowned by an EOT can benefit from capital gains tax relief when the shares are sold. In addition, employees can receive tax-free bonuses when the company performs well.

Peter explained that this was another motivating factor behind their decision: “Original directors sell their shares to the staff, so the business will be run for the benefit of the staff, and then there’s the opportunity to share profit in the form of bonuses. I think the current legislation states the first £3,600 is tax-free per employee. Overall, it feels like a logical conclusion to the way we want to go as a business.”

The main disadvantage touted around EOTs is that they can be complex to set up. Establishing one requires legal expertise, and there may be ongoing costs associated with managing the trust. In addition, it’s said that the process of transferring ownership to an EOT can take time and require significant effort.

However, despite these considerations, Lisa claimed that the process of setting up the EOT wasn’t anything that couldn’t be overcome by a bit of determination, with the transition for Airmaster taking just a few months in total.

“We had been advised it would take a long time,” she said. “But the solicitor we got involved explained that wasn’t the case and if you’ve already got that mindset, just go for it – and we have a can-do attitude at Airmaster! On the whole, we’ve had a positive reaction and the trustee board meetings we have now take an overview of what the business is doing. It provides that extra layer of making sure the decisions in the business are in the best interest of everyone.”

If you’re interested in learning more about setting up an Employee Ownership Trust, visit www.ownershiphub.uk or contact Colette.Harvey@ southyorkshire-ca.gov.uk