What is an Employee Benefit Trust?
An Employee Benefit Trust (EBT) (also known as an employee share
trust) is a discretionary trust established by an employer for the
benefit of the company's employees, former employees and some
of their relatives and dependants – the beneficiaries.
Importantly, the settlor company is not included within the
class of beneficiaries, providing comfort to employees regarding
the independence of decision-making, as well as the safeguarding of
assets should the settlor company enter liquidation.
Provided that the trust meets certain UK legislative
requirements, including those relating to the extent of the
beneficial class and the exclusion of the company, the trust can
benefit from key inheritance tax exemptions where relevant, which
would otherwise apply to offshore trusts. The trust can also be
exempt from certain statutory rules, including financial assistance
provisions.
