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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
115:
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
76:
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
27:
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)
49:
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
162:
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
128:
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
35:
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
46:, 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.
94:
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
157:
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:
166:
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
171:. 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.
61:
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
129:
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.
205:
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
626:
565:
249:
trust by a participant until sold have a special capital gains tax advantage. HM Revenue & Customs
Employee Tax Advantaged Share Scheme User Manual ETASSUM29050
307:
175:
Current arrangements supported by the UK Government to promote employee share ownership and employee ownership using trusts with special tax advantages include:
39:
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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521:
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69:. 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
99:, the trustee may provide a marketplace for employees to buy and sell shares acquired under a share or share option plan; and
451:
335:
106:, 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.
361:
HM Revenue & Customs Trusts, Settlements and
Estates Manual TSEM5025
137:
261:
Department for
Business, Innovation & Skills (30 October 2012).
536:"Rangers' 'Big Tax' case closed after £56million settlement agreed"
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an employee share trust, which holds shares in order to facilitate
489:"Disguised remuneration: a Supreme Court decision (Spotlight 41)"
73:
or retirement benefits scheme, rather than an employee trust.
627:"Employee share scheme statistics – supporting documentation"
149:
the liquidated
Rangers F.C. plc was not settled until 2022.
373:"Consultation outcome on new employee shareholding vehicle"
153:
Encouraging employee share ownership and employee ownership
476:
HM Revenue & Customs
Employment Income manual EIM4500
487:
Her
Majesty's Revenue and Customs (29 September 2017).
132:
Between 2001 and 2009, the Glasgow-based football club
263:"Employee ownership, next steps: government response"
32:
may also be included in the class of beneficiaries.
50:are used avoid the payment of tax on remuneration.
534:Cassidy, Rory; Fleming, Keiran (8 December 2022).
124:Counteracting schemes to avoid tax on remuneration
666:"Employee ownership: A panacea or passing fad?"
452:"How to use offshore employee benefit trusts"
8:
425:"Overview on use of employee benefit trusts"
221:Nelson-Jones, John; Nuttall, Graeme (2007).
336:"Employee benefit arrangements of concern"
223:Employee ownership – Legal and Tax Aspects
625:HM Revenue & Customs (27 June 2019).
605:"Introduction to employee benefit trusts"
308:"The Main Street Employee Ownership Act"
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136:used employee benefit trusts based in
450:Martindale, Nick (13 November 2013).
7:
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603:Nuttall, Graeme (November 2004).
245:For example, shares kept in a UK
225:. Fourmat Publishing. Chapter 6.
24:for the benefit of employees.
1:
664:Palmer, Neil (20 June 2019).
67:employee stock ownership plan
495:. Government Digital Service
429:Croner-i Direct Tax Reporter
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399:"Employee Ownership Trust"
77:accordingly. For example:
42:Many employee trusts are
188:employee ownership trust
104:employee ownership trust
92:employee share ownership
566:"Autumn Statement 2012"
645:Cite journal requires
584:Cite journal requires
518:[2017] UKSC 45
111:Influence of tax rules
340:Australian Tax Office
520: (5 July 2017),
247:share incentive plan
181:share incentive plan
169:share incentive plan
163:case law principles.
63:share incentive plan
44:discretionary trusts
693:Employee trust fund
571:. Paragraph 1.128.
379:. 10 December 2014
292:has generic name (
207:Companies Act 2006
712:Employee benefits
456:Employee Benefits
232:978-1-85190-033-6
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403:ESOP Centre
290:|last=
194:References
544:Reach plc
30:Charities
706:Category
282:cite web
54:Purposes
549:19 June
499:19 June
315:Rutgers
493:GOV.UK
377:GOV.UK
267:GOV.UK
229:
138:Jersey
65:or an
675:3 May
630:(PDF)
608:(PDF)
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461:3 May
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409:3 May
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346:3 May
320:3 May
311:(PDF)
272:3 May
183:, and
22:trust
20:is a
677:2020
651:help
590:help
551:2024
524:(UK)
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411:2020
385:2020
348:2019
322:2020
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274:2020
227:ISBN
186:the
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