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REBECCA ARMOUR and JOHN McLEAN look at the capital gains tax treatment of employee benefit trusts when share options are exercised
KEY POINTS
- Mansworth v Jelley overturned previous practice.
- Lack of definition of grantor leads to certainty for EBTs.
- Effect of TCGA 1992 s 71 on EBT trustees.
- Section 239ZA applies in restricted situations.
- Avoid using an EBT to hold shares for EMI options.
Employee benefit trusts (EBTs) are a well-established way of holding and administering employment-related securities in the UK but there are a number of potential hazards which the tax adviser should bear in mind including the inheritance tax consequences of such arrangements.
The focus of this article however is the capital gains tax implications for EBTs arising upon the exercise of employment-related share options.
Market value rule
Provision is made in TCGA 1992...
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