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HMRC internal manual

Inheritance Tax Manual

Employee benefit trusts: sub-trusts: company as settlor

The issues that are relevant where contributions are made to an employee benefit trusts (EBT) by a public limited company are outlined at IHTM42953.

However, once the assets are settled into trust, the trust itself will be subject to:

  • all the conditions outlined in this chapter, and
  • Inheritance Tax in the same way as any other trust or EBT trust once it is established.

Where the sub-trusts are relevant property trusts, all the normal issues concerned with the trust charges, domicile of settlor and location of assets will need to be considered. In many cases, the sub-trust funds will have been loaned to the beneficiaries, so even if the company settlor and the trustees are overseas, if the beneficiary is resident in the UK, the debt owed to the trust will be a UK asset and potentially subject to both the ten-year and exit charges (IHTM42975).