What is a QUEST?

A QUEST (or Qualifying Employee Share Ownership Trust) is a type of employee benefit trust that was set up under the Finance Act 1989. It had certain tax advantages if you met certain criteria.

• a QUEST must be used to benefit all employees of a company or group, although a qualifying period can be set of up to 5 years;
• in addition to benefiting all employees, all employees must be treated equally, so they must receive the same value per head although this value can be varied according to salary, length of service or hours worked;
• a QUEST can only use money given to it by the company to buy shares in the company, give to employees of the company, repay any interest or loans on outstanding capital or pay its expenses.
• a QUEST cannot distribute shares through any discretionary share plan, in effect it can either give or sell shares directly to employees or via a Save As You Earn share option plan.

What were the tax advantages?

Gifts to a QUEST were tax deductible against corporation tax under the Finance Act 1989. So unlike most other employee benefit trusts, it was possible to claim an immediate tax deduction.