Employee ownership has gone up by more than 1,600% since 2014, according to figures from the Employee Ownership Association.
There are now around 2,470 businesses, employing 358,000 people, who have signed up to employee ownership trusts.
In 2025 so far, 118 businesses transitioned to employee ownership. There were a total of 560 in 2024.
This structure means majority ownership of the company is in the hands of staff, and offers tax benefits to the company in the process.
An employee ownership trust is run by a board of trustees, typically made up of executive directors of the company, employee representatives and sometimes an independent professional trustee.
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Construction is the fastest-growing sector for employee ownership, according to an analysis by accounting firm RSM, growing by 6,580% between 2014 and 2025.
Small businesses make up the most of the employee ownership total, accounting for 65% of trusts.
The EOA says that professional services companies make up most of the employee-owned organisations on their books, at 28%.
Employee-owned companies boast better engagement and boosts to productivity because staff are more invested in their success.
Owners can also benefit from avoiding capital gains tax, which they would usually have to pay on the sale of the business – this was increased from 10% to 18% in the last budget.
However, Fiona Bell, partner and employee ownership trust specialist at RSM, said there are risks to transferring to employee ownership.
“Transitioning to employee ownership poses a risk if the company is overvalued and the employee ownership trust commits to paying more than the business can afford, adding to the debt burden or cash flow strain,” she explained.
“However, the Autumn budget introduced several key tax changes to reduce this insolvency risk, including mandatory market valuation and trustee due diligence.”
Bell added that employees having a share in the business can be a boost to financial resilience, which in turn can improve cost control and decision-making.
“Employee-owned firms also tend to be more cautious with spending and have better management of working capital. The scheme further helps mitigate labour shortages and turnover of staff by enhancing staff retention and morale,” she said.
Well-known examples of employee-owned businesses include John Lewis Partnership and Richer Sounds.
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