Introduction to Tax Advantaged Share Schemes: Employee Benefit Trusts (EBT): General
Employment Benefit Trusts are frequently used to facilitate the grant of share options and subsequent acquisition of shares through tax advantaged share option schemes including Enterprise Management Incentives (EMI). Where EBTs are used it is important that scheme rules are drafted in such way as to allow for this to happen. If it is intended that an option will be granted by an EBT then it must be provided for in the rules.
A Schedule 2 Share Incentive Plan (SIP) requires that a trust be established in a specific form in order to hold shares on behalf of employees. In this instance the trust deed is an integral part of the plan and is considered to form part of the Plan documents (ETASSUM11100). The trust established for a SIP cannot be used for other purposes (such as a general EBT) although it could be operated alongside and in conjunction with a separate EBT. In some cases the trustees of a SIP and an EBT will be the same.