Employee ownership has soared in the past decade

According to the Employee Ownership Alliance, employee ownership has increased by 1,600% in just one year.

Employee ownership trusts have been adopted by 2,470 businesses that employ 358,000 employees.

So far in 2025, 118 companies have become employee-owned. In 2024, there were 560 businesses.

The majority of ownership in the company will be in the hands and the staff. This structure offers the company tax benefits.

A board of trustees is responsible for the management of an employee ownership trust. This board is typically composed of executives from the company, employee representative and, sometimes, a professional independent trustee.

According to RSM’s analysis, construction is the fastest growing sector in employee ownership. It will grow by 6,580% from 2014 to 2025.

The employee trusts are dominated by small businesses, which account for 65%.

According to the EOA, professional services companies account for 28% of employee-owned businesses.

Employee-owned businesses have higher engagement and productivity, as staff are more invested in the success of their company.

Capital gains tax on business sales has been increased from 10% to 18.0% in the latest budget.

Fiona Bell is a partner at RSM and a specialist in employee ownership trusts. She said that there are some risks associated with transferring employee ownership.

She explained that the risk of employee ownership is if the business is overvalued, and the employee trust agrees to pay more than it can afford. This will add to the debt or strain on cash flow.

The Autumn Budget introduced several key changes to reduce the insolvency risks, including mandatory market evaluation and trustee due diligence.

Bell said that employees who own a stake in their business can help improve financial resilience. This can in turn lead to better cost control and more informed decisions.

Employee-owned businesses also tend to spend more carefully and manage their working capital better. She said that the scheme also helps to mitigate labour shortages by improving staff retention and morale.

John Lewis Partnership, Richer Sounds and other well-known employee-owned companies are examples.

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