Gifts to employee trusts: persons qualifying: individuals
IHTA84/S28, TCGA92/S239 (1)(b)
An individual qualifies if he or she disposes of assets to trustees in such circumstances that the disposal is an exempt transfer for the purposes of Inheritance Tax under IHTA84/S28. The basic conditions of section 28 are set out below but you must consult with HMRC - Inheritance Tax if you have any concerns about the application of that section. Do not dispute whether or not section 28 applies unless advised to do so by that office. See CG36101 for guidance on the procedure for contacting HMRC - IHT.
The basic conditions of section 28 IHTA are:
- The assets must be shares and securities beneficially owned by the transferor in a company.
- The trustees, at the date of the transfer, or within one year, must
* hold more than half the ordinary shares of the company, and * have majority voting powers on all questions affecting the company as a whole, and * not be subject to dispossession of the shares or voting powers without their consent.
(This is subject to a special exception in Section 28(3) IHTA. Where there are shares of a class with voting powers limited to resolutions to wind up the company and/or matters affecting the particular class of share the trustees need not have majority voting powers on the particular question.)
- The transfer must be to the trustees of a trust within Section 86 IHTA which is for the benefit of a class which includes most of the employees of the company, (and possibly their relatives and dependants also) see CG36040.
- Certain participators of the company must be excluded from benefit under the trust, see CG36040.