The use of Employee Benefit Trusts in the facilitation of employee share plans
Incentivising employees through equity is one of the most powerful ways to align their success with that of your business. Whether you're a growing private company or a listed organisation with global operations, employee share plans help attract, retain and motivate talent while directly tying individual performance to company value.
But when it comes to administering these plans, structure matters. One of the most important decisions you’ll make is whether to engage a professional Employee Benefit Trust (EBT) provider. The right choice here can make a meaningful difference in the effectiveness, governance, and flexibility of your incentive arrangements.
The Case for Share Ownership
Governments globally, including the UK government, have long recognised the value of employee ownership. From tax-advantaged plans like SIPs, CSOP and EMI to corporation tax deductions for businesses, the policy framework actively encourages employee participation in equity.
In fact, the government has stated it is “committed to supporting employee ownership and encouraging its use more widely in UK business.” And for good reason. The Nuttall Review of 2012 found that employee-owned companies often enjoy:
Greater resilience in economic downturns
Faster job creation
Higher levels of employee engagement
For companies looking to improve long-term performance while sharing value fairly, share plans are not just a benefit, they’re a strategic tool.
No One-Size-Fits-All
While the concept of employee share ownership is simple, the implementation is anything but. Every company must tailor its share plan strategy to:
Its workforce demographics
The outcomes it prioritises (e.g. retention, reward on exit, performance alignment)
Its growth plans and corporate structure
A private company planning for an exit might favour a management incentive plan tied to continued employment. A listed business, on the other hand, may adopt a combination of SIPs, global share purchase plans, and long-term incentive plans across multiple jurisdictions.
That’s why careful planning and trusted advisers are critical to get the structure right.
EBTs: The Engine Behind Your Share Plan
An Employee Benefit Trust is a powerful mechanism that supports a wide range of equity arrangements. It can:
Acquire and hold shares on behalf of employees
Act as nominee to preserve confidentiality of ownership and simplicity of cap tables
Simplify corporate events such as buybacks or exits
Help create an internal market for private companies
Ensure control and oversight of share transactions
And because the EBT’s fiduciary duty is to beneficiaries (typically employees, former employees and their families), it adds a layer of independence that supports good governance.
Offshore Doesn’t Mean Out of Sight - It Means Aligned, Efficient, and Trusted
Offshore EBTs, especially in jurisdictions like Jersey, continue to be a legitimate and recognised solution in UK policy. In 2014, the UK government considered but ultimately rejected a proposed onshore alternative — the “New Employee Shareholding Vehicle.” This supported the view that well-regulated offshore EBTs were not only appropriate but advantageous.
Offshore trustees offer:
Tax neutrality (outside UK CGT and IHT where structured correctly)
Efficient cross-border administration
Specialist expertise in share incentive arrangements
The use of EBTs has also evolved in line with UK legislation, particularly following the introduction of the Disguised Remuneration rules in 2011, ensuring that modern structures serve their intended purpose without risk of abuse.
Governance, Independence & Risk Mitigation
An independent professional trustee provides:
Impartiality in decision-making
Risk reduction by removing internal conflicts of interest
Transparent oversight that aligns with ESG expectations
Nominee services for employee confidentiality and simplified transactions
For listed companies especially, this independence is critical in meeting the expectations of remuneration committees, auditors, and shareholders.
Flexible Tools for a Flexible World
EBTs are remarkably adaptable. They support complex needs, including:
Clawback and malus enforcement
Share acquisitions from leavers and sales to new joiners
Administration of unencumbered share pools
Alignment with international plan rules and reporting
This flexibility ensures your structure continues to serve its purpose as your company grows, restructures, or evolves its incentive philosophy.
The Trustee Relationship Matters
Ultimately, a successful share plan depends not just on legal compliance, but on operational delivery, management of the employee trust, and responsiveness to change. That’s why the relationship with your trustee matters.
At Fiduchi we become a long-term partner in your incentive journey. We combine decades of technical experience with a hands-on, responsive approach to help clients implement and evolve share plans that work.
Ready to Talk?
Whether you’re just starting your equity journey or looking to strengthen your existing plan, Fiduchi’s experienced EBT team can help you structure smarter, govern better, and deliver more meaningful value to your employees. Please contact Tom Hicks or Pearl Rabet for more information, or click here to read more.