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HMRC internal manual

Inheritance Tax Manual

Employee benefit trusts: dispositions by close companies: dispositions not intended to confer gratuitous benefit

Guidance on the general application of IHTA84/S10 is at IHTM04171.

An employee benefit trust (EBT) is usually a discretionary trust. Given that the class of beneficiaries must satisfy the ‘all or most’ test (IHTM42915) and that the potential beneficiaries under an EBT normally include:

  • the participators themselves;
  • the employees or former employees
  • the wives, husbands, civil partners, widows, widowers, surviving civil partners children and step children under the age of 18 of the employees and former employees

it is normally be very difficult to show that the conditions of IHTA84/S10 are met in that there was no intention to confer any gratuitous benefit at the time of the transfer.