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Some employee benefit trusts (EBTs) are set up to provide employees and directors with specific kinds of benefits such as shares in their employing company, pensions and other retirement benefits, accident benefits or healthcare benefits. However general-purpose EBTs have increasingly been used for tax avoidance purposes, with the aim of providing employees and directors with benefits in ways that aim to minimise or avoid liability to Income Tax and employers� National Insurance Contributions (NICs).

In many cases the main risk may relate to Income Tax under PAYE and NICs due on amounts paid out of the EBT, rather than the availability of a Corporation Tax deduction (at some time) for the employer’s contribution. It is therefore important that staff considering deductions for employers� contributions liaise with employer compliance staff so that all aspects of the case are considered together.

»Ê¹ÚÌåÓýappre may also be Inheritance Tax consequences if a deduction for a contribution made by a close company to an EBT is disallowed or deferred in computing the company’s taxable profits. In these cases staff considering deductions for employersâ€� contributions should liaise with WMBC Assets EBT Team, see BIM44550.

A full list of the contents of the guidance on deductions for employersâ€� contributions to EBTs is shown below. »Ê¹ÚÌåÓýapp guidance is subdivided into three main sections:

• General Matters (BIM44501 - BIM44530);
• Deductions for employersâ€� contributions to general-purpose EBTs (BIM44540);
• Timing of deductions for employersâ€� contributions to general-purpose EBTs (BIM44573).