Employee ownership trusts ‘becoming less attractive’ due to Budget change

Employee ownership trusts (EOT) are predicted to become a less popular succession strategy for travel businesses this year while mergers and acquisition are set to rise.

The predictions for 2026 were made during a panel discussion at Travlaw’s annual Big Tent event recently (pictured).

Attraction Tickets, ROL Cruise and McKinlay Kidd are among those travel companies to have switched to an employee ownership model in recent years, but a change in capital gains tax relief in last autumn’s budget reduced the incentive for transitioning to an EOT.

Before the budget, owners could enjoy 100% capital gains tax relief on the sale of their business to an employee trust. The relief was reduced to 50% on transactions on November 26.

Zoe Powell, director of travel, hospitality and leisure at accountancy firm Xeinadin, said there would be far fewer travel firms choosing the EOT model. “They’re not going to be as popular as they were last year,” she said.

But Simon Atkinson, head of travel at Barclays Corporate Banking, said some businesses were still showing interest in employee trusts. He said initial post-budget fears had not materialised with some businesses still showing interest in the employee trust model.

“It still has to be an option for owners of privately owned businesses to consider,” he said, adding: “When you’re looking to exit your business, when you’re creating your succession plan, you need to weigh up the different options. An EOT still might be the right thing under the right circumstances.”

Meanwhile, he predicted more M&A activity this year as private equity companies look to exit.

“Those private equity houses that have been into travel businesses for a lot longer than they would be normally…are now looking for an exit route,” he said, noting: “We want to speak to more businesses in the mid to low end, where succession planning is being thought out about a little bit more.”

Travlaw’s Ami Naru said her company was also seeing “increased activity” in terms of sales and acquisitions in the travel sector.

But she warned buyers not to be complacent if acquiring a family business or a company known to them.

She told the event: “Inheriting or buying a business from a family member doesn’t mean you don’t do your due diligence – it’s even more important. You might think you know a business, but you don’t until you’ve done that due diligence.”