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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Employee benefit trusts: conditions for relief: consultants

By the term consultant we mean:

  • an individual whose services are available on a retainer basis, or
  • a person who is separately employed by a firm offering consultancy services.

So, generally, consultants are not employees of the business and if they are included as potential beneficiaries, an employee benefit trust cannot qualify under IHTA84/S86.

There may be certain circumstances where a consultant contracts to provide an exclusive service for a company. In this case they might be regarded as employed by the company, although it would be reasonable to expect that the consultant would be an employee for Income Tax purposes.

If necessary, you should ask colleagues dealing with the Income Tax affairs of the individual concerned to establish whether or not they are an employee of the body.

If former employees who have since taken on a consultancy role were included this would not by itself infringe IHTA84/S86 (IHTM42923).