Q&As

Can a non-executive director or consultant be a beneficiary under an employee benefit trust?

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Published on LexisPSL on 16/11/2016

The following Share Incentives Q&A provides comprehensive and up to date legal information covering:

  • Can a non-executive director or consultant be a beneficiary under an employee benefit trust?

An employee benefit trust (EBT) is a discretionary trust which means that it is a trust for a class of beneficiaries as opposed to individuals. As a discretionary trust, the trustee (usually following a request from the settlor) chooses which of the beneficiaries actually benefit. For further more general information on EBTs, see Practice Note: What is an employee benefit trust? For a copy of a precedent EBT deed, see Precedent: Employee Benefit Trust Deed.

Typically EBTs are set up to fall within the following statutory provisions:

  1. the definition of a trust for the benefit of employees in section 86 of the Inheritance Tax Act 1984 (IHTA 1984). This provides exemptions from inheritance tax (IHT) for certain transactions involving qualifying EBTs. For further information, see Practice Note: Employee benefit trusts and inheritance tax considerations

  2. the definition of an employees' share scheme in section 1166 of the Companies Act 2006 (CA 2006). This provides exemptions from certain company law requirements for arrangements which are employees' share schemes. For further information, see Practice Note: Corporate issues for share incentives, and

  3. the definition of an emp

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