The following Tax guidance note Produced in partnership with Karen Cooper of Cooper Cavendish LLP provides comprehensive and up to date legal information covering:
Employee benefit trusts (EBTs) are commonly used to support employees' share schemes and to provide other benefits to employees in the form of pensions and bonuses.
Their use has been significantly affected by the introduction of the disguised remuneration rules in ITEPA 2003, Part 7A (see: EIM45000–EIM45165). Although the statutory exclusions from those rules cover many of the share-scheme related activities of EBTs, some of their historic uses, such as providing loans to employees, or opportunities for wealth creation through long-term investment schemes have been substantially curtailed.
For further background on EBTs and pensions tax planning before the introduction of the disguised remuneration rules, see Practice Note: Disguised remuneration—tax planning environment before rules introduced.
However, the use of EBTs as a vehicle for employee ownership had a welcome boost following the Nuttall Review, which encouraged the use of employee trusts as vehicles for the long-term ownership of companies and pressed for a simplification of the tax and regulatory framework. As a result, new tax advantages were introduced in Finance Act 2014 (FA 2014) for employee owners who dispose of their interests to employee ownership trusts (EOTs).
An EBT is usually established by a company (the sponsoring company) which provides it with assets in the form of cash or shares for the benefit of its employees. The operation of
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
Take a free trial
0330 161 1234