Disguised remuneration

The recent Budget confirmed anti avoidance changes effective from 6 April 2011 designed to crack down on what HM Revenue and Customs perceived to be avoidance using offshore remuneration planning structures, such as employee benefit trusts and employer financed retirement benefit schemes.

These schemes have been on HMRC’s radar for a number of years and these provisions effectively spell the end of successful planning through them.

The significant changes which are now in place are that a national insurance and income tax charge will now arise on:

• Loans from third parties such as trustees;
• The earmarking of assets which are later used to provide benefits to the employee; and
• The making available of assets to the employee or person linked to them

However, it’s not all doom and gloom - HMRC have also announced that they intend to exempt deferred rewards meeting certain criteria.

For FSA regulated businesses who are assessing the requirements of the Remuneration Code and are implementing the sections on the deferral of cash bonuses, the anti avoidance provisions could have an adverse affect.

Related news articles - for FSA regulated firms.