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ruled in 2017 that although the (indefinitely extended) loans were valid, the money paid into the trust by
Rangers for an employee's benefit was income subject to income tax and national insurance deductions in the same manner as if it was paid directly to the employee. The resulting tax liability of
126:
The extent to which particular types of employee trust are used in a country at any time can be significantly influenced by prevailing tax rules or other regulations, especially in relation to taxing the direct or indirect payment of remuneration, including policies on what is considered unacceptable
87:
The term employee trust (or, in the UK, employee benefit trust) is most likely to be used to describe a trust, where the trustee has wide-ranging powers, to be used at its discretion. Such a general employee trust may, nevertheless, in practice be intended to achieve a particular purpose and be named
38:
The employees that an employee trust benefits are usually defined by reference to employment by a particular company (or group of companies). In addition to employees, the beneficiaries may, under the terms of the trust, include some or all of former employees (of the relevant company or group)
60:
Government policy and tax rules in the United
Kingdom, the United States and elsewhere encourage the use of employee trusts to support employee share ownership or employee ownership. Although, Government policy and tax rules may also counteract certain uses of employee trusts, for example, when they
173:
the qualifying employee share ownership trust (or QUEST): From 1989 to accounting periods beginning on or after 1 January 2003 a company contributing funds to a QUEST could get a tax deduction as a statutory right for its contribution without having to rely on making a claim based on general
139:
In the UK the use of employee benefit trusts to provide loans to employees (or anything that is a reward or recognition, in connection with an employee's employment) was, in particular, curtailed by anti-avoidance legislation introduced with effect from 9 December 2010. This legislation imposed an
46:
An employee trust is typically established by the relevant employing company (or a company in the employing group) entering into a trust deed (or other trust instrument) which sets out the terms of the trust, including who is to act as its trustee. An employee trust could also be established by an
57:, where the trustee has discretion to select which beneficiaries benefit, when and how. It is possible that beneficiaries have fixed or absolute interests, for example, where shares awarded to employees under an employee share ownership plan remain held in an employee trust.
105:
in a company. Shares may be warehoused in an employee trust until allocated to participants under an employee share or share option plan. Depending on the type of plan, once allocated, shares may then be held by the trustee on behalf of individual employees. In a
168:
The UK Government supports the use of employee benefit trusts as part of genuine arrangements to create employee share ownership or employee ownership. It has over the years provided tax advantages for specific types of employee trust, including:
177:
the HM Revenue & Customs approved profit sharing scheme (or profit sharing trust): From 1978 until 2002 employees under this scheme received a special tax treatment for share awards, but this was phased out following the introduction of the
182:. No new profit sharing schemes were approved after 5 April 2001. Awards under existing schemes ceased on 31 December 2002, although employees could continue to hold tax-advantaged shares from past appropriations.
72:
If the terms of the trust meet requirements prescribed by tax or other regulations, then the employee trust is likely to be known by the name given in the relevant regulations, for example, a
140:
immediate charge to income tax on the full value of such loans (or other benefits) provided from that date. These new tax rules are referred to as the disguised remuneration rules.
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See, for example, the UK definition of a trust for the benefit of employees in section 86 Inheritance Tax Act 1984 or the definition of an "employees' share scheme" in section 1166
637:
576:
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trust by a participant until sold have a special capital gains tax advantage. HM Revenue & Customs
Employee Tax Advantaged Share Scheme User Manual ETASSUM29050
318:
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Current arrangements supported by the UK Government to promote employee share ownership and employee ownership using trusts with special tax advantages include:
50:
The choice of who is the trustee of the trust and the type of property subject to the trust will vary depending on the purpose of the employee trust.
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and individuals defined by reference to their marriage to, civil partnership with or dependence on such an employee (or former employee).
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80:. If the purpose of an employee trust is to provide pensions or other retirement related benefits it is likely to be referred to as a
110:, the trustee may provide a marketplace for employees to buy and sell shares acquired under a share or share option plan; and
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117:, which holds shares on behalf of employees on a long term basis in order to achieve and support employee ownership of a company.
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by providing unsecured loans to employees that the employer had no intention of getting repaid while the employee lived. The
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RFC 2012 plc (in liquidation) (formerly The
Rangers Football Club plc) v Advocate General for Scotland
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a discretionary bonus trust or remuneration trust, which provides cash payments to beneficiaries;
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individual, for example a shareholder in the relevant company, including by their Will.
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an educational trust, which provides funding for the education of employees' children;
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a staff benevolent fund, which provides sick pay or meets medical expenses;
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avoid large amounts of income tax, inheritance tax and
National Insurance
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Employee trusts exist for many purposes and have a wide range of titles.
372:
HM Revenue & Customs Trusts, Settlements and
Estates Manual TSEM5025
148:
272:
Department for
Business, Innovation & Skills (30 October 2012).
547:"Rangers' 'Big Tax' case closed after £56million settlement agreed"
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an employee share trust, which holds shares in order to facilitate
500:"Disguised remuneration: a Supreme Court decision (Spotlight 41)"
84:
or retirement benefits scheme, rather than an employee trust.
638:"Employee share scheme statistics – supporting documentation"
160:
the liquidated
Rangers F.C. plc was not settled until 2022.
384:"Consultation outcome on new employee shareholding vehicle"
164:
Encouraging employee share ownership and employee ownership
487:
HM Revenue & Customs
Employment Income manual EIM4500
498:
Her
Majesty's Revenue and Customs (29 September 2017).
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Between 2001 and 2009, the Glasgow-based football club
274:"Employee ownership, next steps: government response"
43:
may also be included in the class of beneficiaries.
61:are used avoid the payment of tax on remuneration.
545:Cassidy, Rory; Fleming, Keiran (8 December 2022).
135:Counteracting schemes to avoid tax on remuneration
677:"Employee ownership: A panacea or passing fad?"
463:"How to use offshore employee benefit trusts"
8:
436:"Overview on use of employee benefit trusts"
232:Nelson-Jones, John; Nuttall, Graeme (2007).
347:"Employee benefit arrangements of concern"
234:Employee ownership – Legal and Tax Aspects
636:HM Revenue & Customs (27 June 2019).
616:"Introduction to employee benefit trusts"
319:"The Main Street Employee Ownership Act"
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147:used employee benefit trusts based in
461:Martindale, Nick (13 November 2013).
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614:Nuttall, Graeme (November 2004).
256:For example, shares kept in a UK
236:. Fourmat Publishing. Chapter 6.
35:for the benefit of employees.
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675:Palmer, Neil (20 June 2019).
78:employee stock ownership plan
506:. Government Digital Service
440:Croner-i Direct Tax Reporter
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410:"Employee Ownership Trust"
88:accordingly. For example:
53:Many employee trusts are
199:employee ownership trust
115:employee ownership trust
103:employee share ownership
577:"Autumn Statement 2012"
656:Cite journal requires
595:Cite journal requires
529:[2017] UKSC 45
122:Influence of tax rules
18:Employee Benefit Trust
351:Australian Tax Office
531: (5 July 2017),
258:share incentive plan
192:share incentive plan
180:share incentive plan
174:case law principles.
74:share incentive plan
55:discretionary trusts
704:Employee trust fund
582:. Paragraph 1.128.
390:. 10 December 2014
303:has generic name (
218:Companies Act 2006
723:Employee benefits
467:Employee Benefits
243:978-1-85190-033-6
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205:References
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41:Charities
717:Category
293:cite web
65:Purposes
560:19 June
510:19 June
326:Rutgers
504:GOV.UK
388:GOV.UK
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149:Jersey
76:or an
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641:(PDF)
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33:trust
31:is a
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662:help
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562:2024
535:(UK)
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238:ISBN
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