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Selling a controlling interest in a trading company to an Employee Ownership Trust used to be entirely free of Capital Gains Tax: the relief covered 100% of the gain. At the Autumn Budget on 26 November 2025, the government cut that relief to 50%, with immediate effect for disposals from that date. HMRC's stated reason was cost: the relief had grown to roughly £2 billion a year, about 20 times its original 2013 costing.

Under the current rule, 50% of the gain becomes a chargeable gain at the time of sale, taxed at the ordinary CGT rate for shares, 24% for higher and additional-rate sellers or 18% within any unused basic-rate band, after the £3,000 annual exempt amount. Business Asset Disposal Relief and Investors' Relief cannot be claimed on this taxable slice, so there is no reduced rate available on it. The other 50% of the gain is not chargeable at the time of sale, but it does not disappear: it is effectively held over and becomes chargeable to the trustees on a future disposal of the shares by the trust.

Guides that still describe a sale to an EOT as entirely CGT-free were written before 26 November 2025 and are now out of date. Worked example: an owner sells 100% of a trading company to an EOT for £4,000,000, with an original base cost of £200,000, giving a total gain of £3,800,000. Under the old rule this sale would have triggered £0 CGT. Under the current rule, 50% of the gain (£1,900,000) is chargeable now; after the £3,000 annual exempt amount, CGT of roughly £455,000 is payable at the point of sale, at the higher 24% rate with no BADR available. The remaining £1,900,000 is held over as a latent gain inside the trust, chargeable to the trustees whenever they eventually dispose of the shares.