Last week, my two passions crossed paths ⛰
What are they?
I'm a tax lawyer who has been working with management buyouts and share incentives for many years.
I'm also an avid hill-walker who owns several Paramo Jackets and washes them regularly in Nikwax.
So when I found out that the CEO of those two companies sold his shares to an EOT (Employee Ownership Trust), I was intrigued.
EOTs were introduced in 2014 and until recently didn't have many takers.
That was until Entrepreneurs' Relief was reduced from £10M to £1M in 2020.
Shares sold to an EOT are exempt from Capital Gains Tax.
There are, however, many hurdles to surpass.
The key one is that the EOT must have control of the company (50.1%).
It requires HMRC clearance and careful structuring.
Now don't mean to ramble on (no pun intended).
Although Paramo and Nikwax are ethical companies with a keen eye on #ESG.
There are significant tax benefits for the entrepreneur selling out.
What are your thoughts?
