Income Tax (Earnings and Pensions) Act 2003 Schedule 5 paragraph 32

Meaning of "associate": trustees of employee benefit trust

Paragraph 32 provides an exception to the general "associate" rules so that trustees of an employee benefit trust are not automatically treated as associates of a beneficiary merely because that person has an interest in the trust.

• Where an individual is a beneficiary of an employee benefit trust holding shares or obligations of the relevant company, the trustees are not automatically treated as associates of that individual
• This exception only applies if neither the individual, the individual together with associates, nor any associate alone or with others, has at any time after 13 March 1989 beneficially owned or controlled more than 30% of the company's ordinary share capital
• For the purposes of the 30% ownership test, "associate" has its usual meaning but excludes the employee benefit trust trustees where their only connection is the individual's interest in the trust
• "Employee benefit trust" is defined by reference to sections 550 and 551 of the Act, and the rules on attributing company interests to trust beneficiaries in Chapter 11 of Part 7 apply when assessing the 30% threshold