What Changed
From November 2025, EOT CGT relief was cut from 100% to 50%. The effective tax rate on a qualifying EOT sale is now approximately 12% — still lower than BADR (18%) or a standard disposal (24%), but significantly higher than the previous 0%.
The Tax Saving Is Still Real
On a £3 million gain, an EOT saves roughly £300,000 compared to a trade sale with BADR. On smaller gains the saving is tighter, so the non-tax factors matter more in the decision.
When It Still Works
- You care about preserving the business and jobs after your exit
- You have a strong management team but no obvious external buyer
- The business generates enough cash to fund its own acquisition
- Your employees are engaged and capable of taking ownership
When It May Not
- The business depends entirely on you
- Cash generation cannot sustain the purchase payments
- You want maximum price, paid upfront
- Very small employee base makes governance costs disproportionate
The Bottom Line
An EOT at 12% is still the most tax-efficient exit available. But the tax-free era is over, and the decision should be based on what is right for your business and employees, not just what saves the most tax.