Inheritance Tax Act 1984 section 28A

Employee-ownership trusts

Section 28A provides an inheritance tax exemption for individuals who transfer shares in a company into an employee-ownership trust, provided certain conditions about the company's trading status and the trust's structure are met.

• An individual who transfers shares or securities into a settlement (trust) can claim an IHT exemption on the value attributable to those shares, provided three conditions are satisfied.
• The company must meet a trading requirement, the trust must meet an all-employee benefit requirement, and the trust must acquire a controlling interest in the company by the end of the tax year in which the transfer is made (having not held one at the start of that year).
• The detailed definitions of the trading requirement, the all-employee benefit requirement, and the controlling interest requirement are found in the Taxation of Chargeable Gains Act 1992 (sections 236I, 236J, 236K, 236M and 236T).
• The exemption encourages transfers of businesses into employee-ownership trusts by removing the inheritance tax charge that would otherwise arise on the transfer of value.