Consultation targets employee trusts

The government is considering making changes to two types of employee trusts: employee ownership trusts (EOTs) and employee benefit trusts (EBTs).

The aim is to ensure that these trusts are used solely to reward employees and encourage employee ownership and to stop opportunities for tax abuse.

In particular HMRC is seeking views on the conditions for appointing trustees of EOTs such as ensuring that former owners and persons connected with them form less than half of the board. In addition they will all have to be resident in the UK to ensure that any disposal of shares by the EOT would be subject to UK capital gains tax.

Another measure will confirm that payments by the company to the EOT trustees will not be treated as distributions as long as the consideration paid by the trust for the shares is no more than their open...