Helping you prosper
The UK dealership sector is at a crossroads. With tightening margins, uncertainty over EV adoption and rising staff costs, many owners are rethinking their long-term strategy. For those considering succession, the Employee Ownership Trust (EOT) is no longer a fringe option - it’s a credible, tax-efficient and people-focused route.
The number of employee-owned businesses in the UK has tripled in the past five years, and dealerships are beginning to join that movement. The Cars2 transaction at the start of 2025 proves the model works at scale. For the right dealers, an EOT offers something rare: a fair exit for owners, a meaningful reward for employees and a stable future for the business.
What is an EOT - and why should dealers care?
An EOT allows employees to become collective owners of the business through a trust. They don’t buy shares themselves, and they don’t take over the day-to-day running. Instead, the trust holds a controlling interest (usually 51% or more), and the outgoing owners are paid over time - often using company profits.
It’s a model that keeps ownership in-house, protects your legacy and gives staff a meaningful stake in the future. For dealerships, where people are the heartbeat of the business - from the showroom to the service bay - that matters.
Why EOTs are gaining traction in automotive retail
Succession planning in the automotive retail sector isn’t always easy. But for dealers with strong cash flow and a loyal team, EOTs offer a way to exit gracefully without selling out. The benefits include:
- 50% capital gains tax relief for qualifying sellers (50% exempt; 50% taxable on disposals completing on/after 26 Nov 2025)
- up to £3,600 in tax-free bonuses for employees
- cultural continuity - brand, ethos and systems stay intact
- flexible funding - often paid from future profits over five to seven years.
Real world examples
Cars2 Ltd
At the start of 2025, UHY client, Cars2 - a £220m turnover group with 17 dealerships - transitioned to employee ownership. The shareholders wanted to protect the business’ culture, reward their 250+ staff and ensure a smooth succession. The trust now owns the business on behalf of employees, while founder, Allan Otley, remains as Chief Executive and the senior management team continue to lead day-to-day operations. Essentially, the EOT structure allows employees to benefit from future growth while preserving the brand, ethos and operational stability of the business.
Peter Ambrose Peugeot
Back in 2022, Peter Ambrose Peugeot became one of the first mainstream UK dealerships to adopt an EOT. Founder Peter Ambrose had bought the business from Peugeot via a management buyout in the late 1990s. When it came time to sell, he chose a structure that would keep the business in the hands of those who helped build it. The dealership - selling over 1,300 vehicles a year with a turnover of £25m - continues to thrive, with Ambrose still involved in supporting the management team.
And employee ownership isn’t limited to dealers. Restoration specialist Classic Motor Cars, auction house H&H, and major supplier Unipart have all embraced the model. This shows its flexibility across different parts of the automotive industry.
Is your dealership a good fit?
EOTs work best for profitable, people-focused businesses with strong leadership and a long-term view. Ask yourself:
- Is your dealership consistently profitable? EOTs rely on future profits to fund deferred payments. If your dealership has stable earnings from both sales and aftersales, it’s well placed to support the model
- Do you have a committed management team ready to lead? Owners usually stay on for a period after the sale, ensuring a smooth handover. A committed management team is essential
- Would your manufacturer partners support the change? Stability is highly valued by manufacturers. An EOT allows you to reassure OEMs that the dealership remains in safe, familiar hands
- Are your employees engaged and invested in the business? If your employees already feel part of a close-knit business, an EOT will build on that loyalty. Conversely, if morale is low, the structure alone will not fix cultural issues.
If the answer to most of these is yes, an EOT could be a game-changer.
What’s involved?
Implementing an EOT is not just a legal exercise, it’s a cultural shift. You will need:
- a feasibility review to assess profits and repayment capacity
- an independent valuation and HMRC clearance
- a deal structure balancing upfront cash and deferred payments
- a governance framework with trustees and clear decision-making
- a communication plan that brings staff on the journey.
There are, of course, common pitfalls to avoid when implementing an EOT. Over-optimistic financial forecasts can make repayment schedules unmanageable, putting pressure on both the trust and the business. Poor communication with staff may lead to confusion or scepticism, undermining the sense of shared purpose that employee ownership is meant to foster. Failing to secure manufacturer consent can jeopardise franchise relationships, especially in a sector where Original Equipment Manufacturer (OEM) alignment is critical. And if leadership teams are misaligned or unclear on their roles post-transition, both cultural and financial benefits can quickly unravel.
What are the potential risks for the seller?
While EOTs offer compelling benefits, there are risks involved:
Deferred consideration risk: A significant portion of the sale price is typically deferred and paid out of future profits. If the business underperforms post-sale, you may receive less than expected.
No upside from future growth: The sale price is fixed at completion. If the business thrives afterward, you won’t benefit from any increase in value.
Loss of control: To meet qualifying conditions, you must relinquish control of both the company and the EOT. If you retain a board seat or become a trustee, your role is advisory, not executive.
Governance complexity: EOTs require a robust governance framework. If not well-structured, decision-making can become unclear or ineffective, affecting both cultural and financial outcomes.
EOT vs other succession options
| Option | Advantages | Key risks/considerations |
| EOT | 50% CGT relief for sellers, staff engagement, cultural continuity | Deferred payments, governance requirements |
| Trade sale | Immediate cash, potentially higher valuation | Risk of culture change, job losses, loss of independence |
| Management buyout | Retains management, gradual transition | Requires significant debt, no CGT relief |
EOTs are not about chasing the highest price. They’re about balancing value with legacy - and for many dealers, that’s a trade worth making.
The next steps
Download our 2025 EOT Guide for more information about how employee ownership can support succession planning, deliver tax advantages and protect your business’ culture.
If you are thinking about the next chapter for your dealership and want to protect what you have built while rewarding the people who helped build it, an EOT might be a smart investment. At UHY, we have guided many businesses through the transition. We can help you assess feasibility, structure the deal and communicate clearly with your team, ensuring the process is practical and future proof. If you would like to discuss your options, please contact one of our automotive specialists.
Clarifying note: Before 26 November 2025, qualifying disposals to an Employee Ownership Trust were fully exempt from Capital Gains Tax (0% CGT). Following the Autumn Budget 2025, only 50% of the gain is now exempt, with the remaining 50% becoming a chargeable gain.
Read more in our 2026 Automotive Outlook
Download our 2026 Automotive Outlook to read our expert's views on the key issues impacting the sector and the challenges and opportunities that lie ahead.
