An employee benefit trust is a discretionary trust a company funds for the benefit of its workforce — and few structures in UK tax carry more baggage per word. Used properly, an EBT is unremarkable corporate plumbing: warehousing shares for option schemes, buying out leavers, making an internal market in a private company's equity. Used the way a generation of promoters sold them — as conduits for "loans" that were really salary — they produced the disguised remuneration rules, the loan charge, and fifteen years of litigation that is only now, in 2026, reaching a settlement endgame. Both halves of the story matter, because both are live.
The legitimate EBT: share plumbing
Growing companies with share schemes need a warehouse: somewhere to hold shares for future option exercises, somewhere to buy shares back from departing employees without a capital reduction, a counterparty for an internal market so staff can realise value between funding rounds. That is what EBTs are for. The trustee (often professional, sometimes offshore for administrative reasons that are legitimate in themselves) holds shares; the company funds it; employees benefit through the schemes — EMI, CSOP, growth shares — that the trust services.
Even the clean version has technical edges that need managing: corporation tax deductions for contributions are deferred until employees are actually taxed on benefits (funding the trust is not, by itself, deductible); most EBTs sit in the relevant property IHT regime with ten-year and exit charges unless the statutory employee-trust conditions are met; and close company contributions can create charges on participators. An EBT is also not an employee ownership trust — the EOT is a statutory all-employee vehicle with its own reliefs and a controlling-interest requirement; the terms get swapped constantly and describe different animals.
The abusive EBT: how we got the loan charge
The 2000s scheme was simple: employer pays a bonus into an EBT; trust "lends" it to the employee; loan never repaid; no PAYE, allegedly. The Supreme Court demolished the logic in the Rangers case — redirecting earnings through a trust does not stop them being earnings — and Parliament had already legislated the disguised remuneration rules: where a third party like an EBT trustee loans money, earmarks funds or makes assets available in connection with employment, the value is taxed as employment income. Then came the 2019 loan charge, taxing outstanding scheme loans in one year — and with it years of controversy over retrospection and the human cost, softened once by the Morse review and litigated politically ever since.
2026: the settlement endgame is actually here
This is the part anyone with loan charge exposure needs current: the independent review commissioned in 2025 reported, the government responded at the last Budget, and a statutory settlement scheme is now live — regulations made, HMRC issuing offers from autumn 2026 to the roughly 32,000 people still unsettled. The published terms — set out in HMRC's implementation paper and the underlying 2026 regulations — are materially softer than anything previously available: the first £5,000 of liability written off for everyone, all late-payment interest forgone, no IHT pursued on the trust structures, an offset for assumed promoter fees, penalties reserved for egregious cases, and instalment plans that can run beyond ten years. The loan charge itself was not repealed — the review concluded repeal would be unfair to those who already settled — but the terms now on the table are the best that have ever existed, offers come with a minimum 90-day acceptance window, and the details are still being operationalised, so anyone in scope should be getting advice on their specific numbers now rather than filing the envelope.
Equally current: promoters have not retired. HMRC's spotlight publications keep flagging fresh trust-and-loan variants sold to contractors and owner-managers as "HMRC-compliant". The heuristic that survives every rebrand — if a structure delivers your own earnings back to you untaxed via a trust, a loan, an annuity or a fiduciary re-description, it is the same scheme in new clothes, and the eventual bill lands on you, not the promoter.
If you have an EBT — either kind
For the legitimate share-warehouse EBT, the maintenance list is short: trustee minutes and accounts current, the IHT ten-year anniversary diarised and calculated, contributions tracked against the deferred-deduction rules, and the trust's role documented within the wider share scheme architecture. For legacy loan arrangements, the sequence is: establish exactly what is outstanding and which years are in scope, model the new settlement terms against your facts, and respond to any offer within its window with advice — the difference between a well-negotiated settlement and a defaulted one is now defined in regulations rather than discretion, which cuts both ways.
Acumon advises on both faces of this structure — trust compliance and trust tax for working EBTs, and loan charge settlement support through our HMRC investigations team for the legacy cases. If a settlement offer is already on your desk, the 90 days are running; start there.