Employee Benefit Trust Definition

GLOSSARY

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What does Employee Benefit Trust mean?

EBT is an acronym for ‘employee benefit trust’, which is a type of discretionary trust which is set up primarily for the benefit of employees and former employees of a company (or parent company) and those of its subsidiaries and certain dependents.

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Establishing a share incentive plan (SIP) and granting SIP awards—all-encompassing resource pack

Establishing a share incentive plan (SIP) and granting SIP awards—all-encompassing resource pack FORTHCOMING CHANGE: Following its announcement as part of the Spring Budget on 15 March 2023, HMRC published a call for evidence on how to improve and simplify non-discretionary tax-advantaged Save As You Earn (SAYE) and Share Incentive Plan (SIP) schemes on 5 June 2023. The call for evidence focused on the effectiveness and suitability of SAYE and SIP, participation levels in the schemes, their flexibility and ease of operation and administration, whether the schemes are appropriately targeted to incentivise share ownership amongst those on lower incomes, and how other performance incentives compare to SAYE and SIP. The deadline for responses was 25 August 2023 and the government’s response to the call for evidence is awaited. For further details, see: Share Incentives weekly highlights—8 June 2023. For more general information on share incentive plans (SIPs), see Practice Note: What is a share incentive plan? Step Details of step Lexis®PSL resources required to implement step Timing...

Checklist for establishing an EBT

Checklist for establishing an EBT FORTHCOMING CHANGE: On 11 March 2024, HM Treasury launched a consultation on the effectiveness of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692, which place requirements onto a range of businesses to identify and prevent money laundering and terrorist financing. The consultation includes reforming registration requirements for the Trust Registration Service (TRS)—with a possible de minimis exemption from registration on the TRS if certain tests are met. Responses to the consultation were sought by 9 June 2024 and the government’s response is awaited. See Open consultation: Improving the effectiveness of the Money Laundering Regulations and Share Incentives weekly highlights—14 March 2024—Employee Benefit Trusts. This is a checklist of the main items that must be considered before setting up an employee benefit trust (EBT) and immediately following the establishment of the EBT. It assumes that the company has already made the decision to set up the EBT, having taken appropriate advice on this. For further...

The advantages and disadvantages of each share incentive arrangement

The advantages and disadvantages of each share incentive arrangement This Practice Note seeks to summarise the main advantages and disadvantages of each of the following most commonly utilised employee share incentive arrangements: • enterprise management incentives (EMI) schemes • company share option plans (CSOPs) • share incentive plans (SIPs) • save as you earn/sharesave (SAYE) schemes • unapproved share option schemes • long term incentive plans (LTIPs) • growth/value share arrangements • joint share ownership plans (JSOPs), and • phantom share plans EMI schemes For further general information on EMI schemes, see Practice Note: How EMI schemes work and key features. Advantages of EMI schemes • of all the tax advantaged share schemes, EMI schemes are the most flexible with regard to the design of the terms of the scheme • an advance assurance can be obtained from HMRC regarding the company’s ability to qualify to grant EMI options. Please note, options must be notified to HMRC within the statutory notification deadline • there is no minimum holding period...

Employee share schemes—dealing with leavers

Employee share schemes—dealing with leavers What are leavers? Departing individuals are known generically as ‘leavers’ but the reason behind the departure will usually result in different treatment depending on whether the leaver is considered to be a ‘good leaver’ or a ‘bad leaver’. Typically those leaving for such reasons such as: • redundancy • retirement • death • disability • ill health or injury • a transfer of employment protected by Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006), SI 2006/246, or • the participant leaving because the employer company has ceased to be an associated company of the scheme organiser will be treated as ‘good leavers’ while those dismissed for any other reason or specifically for poor performance or leaving to join a competitor are treated as ‘bad leavers’. These are not technical terms but are commonly used in share schemes when dealing with the treatment of those who leave. The definitions of good and bad leavers can often be defined by the company in order to...

Discover our 124 Practice Notes on Employee Benefit Trust

Share purchase agreement—pro-buyer—corporate seller—conditional—long form

Share purchase agreement—pro-buyer—corporate seller—conditional—long form This Agreement is made on [insert day and month] 20[insert year] Parties 1 [Insert name of selling corporate entity] incorporated in [England and Wales OR [insert country of incorporation] OR with registered number [insert company number] whose registered office is at [insert address] (the Seller); 2 [Insert name of purchasing corporate entity] incorporated in England and Wales OR [insert country of incorporation] OR with registered number [insert company number] whose registered office is at [insert address] (the Buyer), and 3 [Insert name of guarantor entity] incorporated in England and Wales OR [insert country of incorporation]] with registered number [insert company number] whose registered office is at [insert address] (the Guarantor) [(each of the Seller, the Buyer and the Guarantor being a Party and together the Seller, the Buyer and the Guarantor are the Parties).] Background (A) The Company (as defined below) is a private company limited by shares and is incorporated in [England and...

Share purchase agreement—pro-buyer—individual sellers—conditional—long form

Share purchase agreement—pro-buyer—individual sellers—conditional—long form This Agreement is made on [insert day and month] 20[insert year] Parties 1 The several persons whose names and addresses are set out in Schedule 1 (together the Sellers), and 2 [Insert name of purchasing corporate entity] incorporated in [England and Wales OR [Insert country of incorporation]] with registered number [insert company number] whose registered office is at [insert address] (the Buyer), [(each of the Sellers and the Buyer being a Party and together the Sellers and the Buyer are the Parties).] Background (A) The Company (as defined below) is a private company limited by shares and is incorporated in[ England and Wales OR [insert country of incorporation]]. Details of the Company are set out in Schedule 2, Part A. (B) The Sellers are the legal and beneficial owners of the Sale Shares (as defined below), being in aggregate the entire allotted and issued share capital of the Company. (C) The Sellers have agreed to sell and the...

Dive into our 54 Precedents related to Employee Benefit Trust

Where an Employee Benefit Trust Deed contains provisions restricting the ability to vary the deed, is it still possible to agree a variation if all parties to the deed agree?

Where an Employee Benefit Trust Deed contains provisions restricting the ability to vary the deed, is it still possible to agree a variation if all parties to the deed agree? Despite there being no express terms of variation in the employee benefit trust (EBT) deed, it should be noted that amendments can often be effected by a range of powers in the trust deed. For example, a power of appointment may be wide enough to permit an addition to, or a variation, modification, alteration, or amendment of administrative provisions, without there having to be an appointment of the trust fund itself or any dealing with the beneficial interest; for example, see Re Rank’s Settlement. Additionally, in the absence of any express provisions of variation in the EBT deed, it may still be possible to effect a variation of the terms of the trust by taking advantage of the rule in Saunders v Vautier. However, it is not possible for the settlor and trustee(s) (ie the original parties to...

How does one complete a share purchase transaction in a timely manner when an option holder is being transferred shares following the exercise of their options and delays are incurred because of the stamping process?

How does one complete a share purchase transaction in a timely manner when an option holder is being transferred shares following the exercise of their options and delays are incurred because of the stamping process? In this Q&A references to buyer can be read as a reference to an option holder or an ultimate buyer of a company. Before a buyer can be entered in the register of members as the legal owner of the shares, the stock transfer forms transferring those shares must be stamped. There is usually some delay in stamping stock transfer forms and this may cause delays when completing on a share purchase pursuant to which the option holder (as a shareholder) is selling his shares to the final buyer. Same day stamping is only available in exceptional circumstances. The stamping delay is also likely to be of concern in transactions involving completion accounts adjustments to the purchase price, where HMRC Stamp Taxes will usually wait until the final consideration has been...

See the 29 Q&As about Employee Benefit Trust

Tax weekly highlights—12 December 2024

This week's edition of Tax weekly highlights includes: (1) key announcements from the draft Welsh Budget 2025–26, (2) analysis of the Court of Appeal’s decision in Axa Sun Life plc v HMRC, and (3) the UT’s decision in HMRC v Colchester Institute Corporation.

Share Incentives weekly highlights—14 November 2024

This week's edition of Share Incentives weekly highlights includes (1) publication of Finance Bill 2024–25, (2) a change in the bonus rates for SAYE schemes and (3) a new Q&A which considers the requirements of the 'trustee independence condition' in respect of employee ownership trusts (EOTs), which was announced as part of Autumn Budget 2024 and for which draft legislation has also been published.

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