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HMRC internal manual

Business Income Manual

Specific deductions: employee benefit trusts: setting up costs

S33 Income Tax (Trading and Other Income) Act 2005, S53 Corporation Tax Act 2009

The costs of setting up an EBT are capital expenditure and not an allowable deduction in computing taxable trade profits. The existence of an EBT is an asset or advantage of an enduring nature for the company that sets it up. EBTs typically have a life of up to 80 or 125 years, see BIM44501.

The capital costs of setting up an EBT include:

  • the initial amount (usually a small amount such as £100) settled by the person setting up the trust (the ‘settlor’) to bring a valid trust or settlement into existence, see BIM44501,
  • any expenditure incidental to bringing the trust into existence, such as legal or other professional fees.

General guidance on whether expenditure is capital or revenue in nature is at BIM35000 onwards.