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HMRC internal manual

Inheritance Tax Manual

Employee benefit trusts: conditions for relief: part-time staff and casual labour

Where the eligibility for employees to benefit extends only to full-time employees, there may be difficulties in industries which rely heavily on part-time staff and casual labour. For example, some breweries that own large numbers of public houses are often staffed by managers rather than tenant landlords and those working in the pubs are employees of the brewery.

Such temporary or irregular employment does not usually qualify the employee for membership of the company’s employee benefit trust (EBT). As an EBT can only satisfy IHTA84/S86 where the eligible employees comprise a majority of all employees (including part-time and casual), you may need details of how the workforce is made up at the time a charge arises. Each case will need to be considered on its merits.

Where the class of beneficiaries does not include ‘all or most’ of the employees, when taking into account the part time and casual workers, the trust will not meet the requirements of IHTA84/S86. It will be a relevant property trust (IHTM42161).