Our team has developed a reputation for being dedicated to understanding your business requirements and has such has been highly praised in the leading law firm directory Chambers and Partners:
“This “proactive and supportive” team has been involved in a number of high-profile regional deals. It has particular experience in the healthcare market, company reorganisations and in dealing with information memoranda for collective investment schemes.”
With offices in Leeds, Sheffield and York, we can offer legal advice about EBTs either on a face-to-face basis, by post or email. To get employee benefit trust explained to you, call our team of lawyers on 0333 323 5292 or fill in the enquiry form and we will be in touch.
What is an EBT?
An EBT is a trust fund that is established by an employer for its employees, and typically takes the form of employee stock ownership plans (ESOP) or employee pension schemes. In a scheme of this kind, the company is the grantor, while the employees are the beneficiaries.
We have recently put in place an EBT for a successful family-controlled company. The controlling family have placed approximately a quarter of the shares in the company into an EBT and have every intention that those shares will be distributed quite widely as part of an overall scheme to retain and incentivise their key staff. To that end, around 25 employees have been granted tax-advantaged options under the Enterprise Management Incentive (EMI) scheme, which will vest based on performance criteria over three future financial years. A key employee has additional rights to acquire shares from the EBT.
Another client company, which is majority owned by a venture capital firm, has recently established a Jersey-based EBT for the benefit of a wide range of its employees with the aim that on a sale of the company the shares in the EBT will be turned into cash and that cash then distributed to employees by the trustees of EBT on a discretionary basis.
Risks of EBTs
There can be risks in using EBTs. Those risks increase the more ‘creative’ you try to be.
Most companies will opt to stay at the more conservative end of the spectrum, using EBTs in ways that are well established and extremely unlikely to attract undue attention from HMRC.
Perhaps the most high profile case where the scheme gained negative publicity was the previous incarnation of Glasgow Rangers Football Club, using an EBT structure to make loans to its players and other staff.
After a series of unsuccessful cases, the Court of Session in Edinburgh has recently supported HMRC’s argument that, as such loans are really a form of remuneration, they should be taxed as such. Rangers argued that as these loans can be repaid – however likely that is – then the payments are not taxable. Rangers have applied for leave to appeal to the Supreme Court.
At Lupton Fawcett, our EBT experts, Jonathan Oxley and Julian Moran, have many years of experience in using EBTs in what we believe to be the right way.
We seek to exceed expectations in every interaction we have with our clients. We do this by making sure we tailor our service to your business’s individual needs at all times and ensuring we are straight-talking, open-minded and forward-thinking.
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With offices in Leeds, Sheffield and York, we can offer legal advice about EBTs either on a face-to-face basis, by post or email. For more information about EBTs, call our team of lawyers on 0333 323 5292 or fill in the enquiry form and we will be in touch.