Guidance

HS277 Employee Ownership Trusts and Capital Gains Tax (2026)

Published 6 April 2026

This helpsheet provides information to help claim relief from Capital Gains Tax on disposal of shares to the trustees of an Employee Ownership Trust.

It provides a guide to claiming the relief but does not cover all cases. You can get help from your tax advisor.

You can also read sections CG67800 to CG67890 in the HMRC Capital Gains Tax Manual which explain the rules in more detail.

What is Employee Ownership Trust relief

Employee Ownership Trust (EOT) relief reduces the amount of Capital Gains Tax (CGT) due on disposal of shares in a trading company to the trustees of an EOT where the relief conditions are met.

An EOT is special type of trust that is set up to hold a controlling interest in a trading company, for the benefit of the employees of the company. To qualify for relief, the EOT must satisfy conditions set out at CG67820 for the year of disposal.

Relief is only available for disposals taking place during the tax year within which the trustees of the EOT acquire the controlling shareholding in the company.

Who can claim relief

EOT relief is available to individuals, and some trustees of settlements, but it is not available to companies. You can only claim relief if the conditions set out at CG67820 are met.

Amount of relief

For disposals on or after 26 November 2025 that meet the conditions for EOT relief, half of the gain on disposal is exempt from CGT. The remaining half of the gain is charged to CGT according to the normal rules. Business Asset Disposal Relief (BADR) and Investors’ Relief are not available where EOT relief has been claimed.

For disposals on or before 25 November 2025 that met the conditions for EOT relief, the full gain is exempt from CGT.

Withdrawal of relief if a ‘disqualifying event’ occurs

If the EOT ceases to meet the relief conditions at any time in the four tax years following the tax year of disposal, this may trigger a ‘disqualifying event’.

If a disqualifying event occurs during this time, the relief may not be claimed and any relief already claimed will be withdrawn. See CG67860 for further information.

How to claim relief

You should claim EOT relief in your 2025 to 2026 tax return.

Claims must include the following:

• information to identify the trust
• the name and registered address of the company
• the date of the disposal and the number of shares disposed of
• the number of employees of the company at the date of disposal
• the consideration received for the disposal

See CG67810 for further guidance on what information must be included. You can record this information in the ‘Any other information’ section of your tax return.

Filling in the Capital Gains Tax summary pages

For disposals on or after 26 November 2025, the Capital Gains Tax summary notes explain how to include chargeable gains where there has been a claim to EOT relief.

You must ensure that you only include the chargeable 50% of the gain within the ‘gains’ boxes of the CGT summary pages. You can use the computation working sheet provided at page 15 of the Capital Gains Tax summary notes to record your calculations.

The following is a calculation to work out the chargeable gain.

Example

You dispose of your shares in a trading company to the trustees of an EOT on 1 December 2025, and the relief conditions are met. Your gain on disposal is £5m. The amount of the gain exempt from CGT under the EOT relief is half of this amount, £2.5m. You must include the remaining net gain of £2.5m as your chargeable gain in the summary pages of your CGT return.

For disposals on or before 25 November 2025 that meet the conditions for EOT relief, there is no chargeable gain to include in the CGT summary pages. You still need to claim the relief and provide the information set out in the ‘How to claim relief’ section.

Payment of tax by instalments

If the consideration you receive in return for the disposal of shares to the trustees of the EOT is payable to you in instalments, you may apply to HMRC to pay the tax due in instalments under Section 280 Taxation of Chargeable Gains Act (TCGA) 1992. This treatment is available where the consideration instalments begin no earlier than the date of disposal, extend over a period exceeding 18 months, and continue beyond the date on which the tax would otherwise be due.

Applications to pay by instalment should be made in writing to HMRC’s Capital Gains Tax Queries postal address, with the letter heading containing a clear reference to ‘Section 280 TCGA 1992’. See CG14910 for further information.

Contact HMRC

Contact HMRC for advice on Self Assessment and to change your personal details.