Chapter: 2 - Inheritance Tax Mitigation: The Basics

Gifts of shares to employee trusts

2.2.9

To secure the IHT exemption, the beneficiaries of the trust are restricted to a class defined by particular employment or type of employment and their relatives  (IHTA 1984 s28, with the conditions set out in s86). Where there is a particular employment, the class must comprise all or most of the employees or the trust must be an approved profit-sharing scheme. Trustees must hold at least 50% of the company and no participator (broadly a shareholder with 5% or more) must be able to benefit.