Taxes Consolidation Act 1997 Schedule 12 Paragraph 11

Conditions that beneficiaries must meet

Schedule 12 Paragraph 11 sets out who may be a beneficiary of an employee share ownership trust (ESOT), specifying the conditions that employees, directors, former employees and directors, and charities must meet.

• Current employees and full-time directors (working at least 20 hours per week) in the founding company's group who have served a qualifying period of up to three years and are chargeable to tax under Schedule E are eligible beneficiaries.
• Former employees and directors may remain beneficiaries for up to 18 months after leaving, or for up to 20 years where certain borrowing and pledging conditions are satisfied.
• A person who has, or had within the previous 12 months, a material interest in the founding company cannot be a beneficiary.
• A charity may be included as a beneficiary only where there are no other eligible beneficiaries and the trust is being wound up.