Pett on Employee-Ownership Trusts
- ABOUT THIS SERVICE
- 1. INTRODUCTION AND BACKGROUND
- 2. THE CAPITAL GAINS TAX RELIEF
- 3. THE TRUSTEES
- 4. THE TRUST DEED AND OTHER DOCUMENTATION
- 5. BALANCING THE INTERESTS OF VENDORS, TRUSTEES, MANAGEMENT, EMPLOYEES AND OTHER SHAREHOLDERS
- 6. SELLING SHARES TO THE EOT
- 7. FUNDING THE TRUSTEES
- 8. GIFTS OF SHARES TO THE TRUSTEES OF AN EOT
- 9. AN EOT AS A DISCRETIONARY SETTLEMENT – OTHER INHERITANCE TAX ISSUES
- 10. TAX-FREE BONUSES FOR EMPLOYEES
- 11. PUTTING SHARES INTO THE HANDS OF EMPLOYEES
- 12. DISTRIBUTING PROFIT TO EMPLOYEES
- 13. DISQUALIFYING EVENTS AND THE CONSEQUENCES
- 14. DISPOSALS OF SHARES BY THE EOT TRUSTEES
- 15. HOW COULD THE TAX REGIME BE ENHANCED TO ENCOURAGE A MOVE TO EOT OWNERSHIP?
- 16. AFTERWORD
- APPENDIX – USEFUL LINKS
Pett on Employee-Ownership Trusts is about a special type of trust known as an ‘employee-ownership trust’ (EOT) for the benefit of the employees of a company, or group of companies.
Principally, it is about selling a company (C) to the trustees of such a trust in a manner that affords certain vendors relief from capital gains tax (CGT), and allows the company, once it is majority-owned and controlled by the trustees, to pay tax-free bonuses to its employees.
Both forms of tax relief were introduced in 2014 to promote the establishment of employee-owned companies and, in particular, companies owned by a trust for the benefit of their employees.
About the author:
David Pett is a tax barrister at Temple Tax Chambers specialising in employment-related taxes, employment trusts, employee-owned companies and related company law, trust law and tax disputes.
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