What Is An Employee Benefit Trust?

You may come across the term “Employee Benefit Trust” from time to time but what does it mean?

An EBT is an entity which is often used to hold shares in a company on behalf of employees and to grant awards to employees over those shares. It is a vehicle by which employees can be motivated to drive better performance in the business because by being awarded an interest over the shares in the Trust they have an opportunity to sell those shares in exchange for cash if the company was sold at some point or they can be used as a step towards a more wholesale ownership of the business by its employees or a management buyout. There are a number of tax regimes which can be applied in making the transfer of the shares more tax efficient for the employees .

Owner Managers need not be concerned that by creating this vehicle and adopting such share schemes for employees they are going to somehow loose power or control over the business, moreover employee share schemes are considered by and large by Funders and Investors to be a good thing for the business as a whole. There are a raft of protections which our Corporate Collegues in Geldards can implement for the business to make sure the value of the equity and the control over the decision making vests in the right people at all times.