Employee benefit trusts overview and administration

Produced by Tolley in association with

Employment Tax

Guidance

Background

Employee trusts are commonly used to support employee share schemes but can also be used as part of an arrangement companies put in place to pay cash bonuses or other benefits. There are many different names for them, including employee share ownership plans (ESOPs), employee share trusts (ESOTs) and employee benefit trusts (EBTs), but they all fundamentally serve the same purpose as discretionary trusts set up by a company or group of companies as part of its remuneration strategy for employees.

An EBT will be established by a company (the sponsoring company) which will provide it with assets (usually cash or shares). An EBT will often be funded by way of loan or the company may make it an outright gift. The document governing how the EBT operates is called the trust deed and rules. This lays down the obligations of the sponsoring company and contains the powers and duties of the trustees. The trustees must act in accordance with the terms of the trust deed and rules and also

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL

Karen Cooper

Partner at CooperCavendish LLP

Karen is an experienced employee benefits lawyer with more than 20 years' experience in advising companies of all sizes in relation to their employee benefit and remuneration issues. She trained and worked for leading law firms Baker McKenzie LLP and Linklaters LLP and spent three years as a remuneration consultant at Ernst & Young LLP. Prior to co-founding Cooper Cavendish, Karen headed up Osborne Clarke LLP's employee benefit practice for 15 years. Karen is a thought-leader and regularly speaks and presents at industry conferences and events. She is a member of the Small Quoted Companies Alliance Share Scheme Committee and the Share Plan Lawyers Organisation. Karen is also the author of a wide range of legal publications including the chapter on executive remuneration in Sweet & Maxwell's 'Corporate Governance', the chapter on employee share schemes in Jordan's Company Administration and she contributes regularly to Tax Journal, and Practical Law (PLC). She is ranked as a leading individual on employees share schemes in Chambers and Partners and was recognised in the 2015 International Tax Review Women in Tax Leaders (a comprehensive guide to the world's leading female tax advisers).

Popular Articles

Personal Tax

Transferable tax allowance (also known as the marriage allowance)

Transferable tax allowance (also known as the marriage allowance)What is the transferable tax allowance (marriage allowance)?From 6 April 2015, an individual can elect to transfer 10% of the personal allowance (£1,260) to the spouse or civil partner where neither party is a higher rate or additional

14 Jul 2020 13:52 | Produced by Tolley Read more

Owner-Managed Businesses

Trade or hobby

Trade or hobbyInteraction of hobby farming rules and commercialityFarming has its own set of ‘hobby farming rules’, which historically have stated that a profit must be made every six years. This is known as ‘the five-year rule’, in that there can be five years of losses but there must be a profit

14 Jul 2020 13:50 | Produced by Tolley Read more

Corporation Tax

Non-trading deficits on loan relationships

Non-trading deficits on loan relationshipsOverview of non-trading deficits (NTDs)When a company’s debits on its non-trading loan relationships and derivative contracts in an accounting period exceed the credits on its non-trading loan relationships and derivative contracts in the same period (the

14 Jul 2020 12:17 | Produced by Tolley Read more

��Ӱ��