Employee-Ownership Trusts 2nd ed

Since legislation was introduced in 2014, there has been a consistent growth in the number of company sales to employee-ownership trusts (EOTs).

Accountants and lawyers need to understand the different aspects of establishing a suitable trust, including satisfying the tax requirements to obtain CGT exemption and putting in place suitable corporate governance arrangements to ensure that the vendors are paid in full and that the business continues to prosper as an EOT-owned company.

This volume brings together the technical and practical aspects, offering a vital guide for professional advisers in this field.

New for the 2nd edition:

• New for this edition
• Overview of the 2023 government consultation
• Summary of the 2024 changes to the tax rules
• The additional requirements for relief from CGT applying from 30 October 2024
• Additional guidance re the controlling interest requirement
• Extension of the period in which vendors of shares sold to the EOT are at risk of losing their exemption from CGT
• Updated guidance on the formerly permitted use of offshore trustees
• Contrived arrangements to secure discharge of trustee obligations
• Requirement, as part of the consideration requirement, that interest on deferred consideration must not exceed a reasonable commercial rate
• Updated guidance on non-statutory clearances
• Revised HMRC approach from 30 October 2024 to treatment of contributions as distributions and the need for relief claims by trustees
• Revised position from 30 October 2024 re IHT charges from close company dispositions of property
• Additional requirements from 30 October 2024 re IHT relief on gifts by individuals to EOTs
• Relaxation, from 30 October 2024, of participation requirement for tax-free bonus payments, to allow the exclusion of directors
• Additional commentary on potential pitfall when using a separate class of shares for employees and on the buy-back of shares from employees
• Potential breach of trustee independence requirement, for shares acquired from 30 October 2024, if a director or employee becomes an excluded participator
• Expanded definition, from 30 October 2024, of disqualifying events
• Expanded commentary on clawback charge to CGT in context of trustee duty to act in interests of beneficiaries