EBT/EOT—tax treatment

Onshore versus offshore EBTs

Some EBTs are established offshore (ie are non-UK resident) and some are established onshore (ie are UK resident).

Companies often opt to use onshore EBTs for cost reasons, particularly if the trustee’s duties are both simple and infrequent. In addition, an EBT used in connection with a share incentive plan (SIP) (or in respect of an employee ownership trust to which a company is sold on or after 30 October 2024) must be a UK resident trust. However, in other cases there are a number of commercial and tax reasons for establishing an EBT offshore, including:

1. •

   the trustee sector in many offshore jurisdictions is very well advanced, offering companies a very useful outsourced service for administrating their EBTs

2. •

   the range of independent trustees can help to avoid some of the issues that can be problematic for trusts that are established using company personnel, and

3. •

   the tax position can be significantly more advantageous for an offshore...