Anti avoidance – EBTs and EFRBS
The Government has confirmed that anti-avoidance legislation is to be introduced to tackle arrangements involving trusts or other vehicles used to reward employees.
Such arrangements typically seek to avoid or defer the payment of income tax or National Insurance Contributions (NICs). The arrangements may also have as an objective the provision of a tax-advantaged alternative to saving beyond the annual and lifetime allowances available in a registered pension scheme.
This latest confirmation follows the June Budget announcement that such legislation would be introduced from April 2011. Also announced were anti-forestalling provisions which will apply to any arrangements of this sort made between 9 December 2010 and 5 April 2011. Any such arrangements that are not subjected to tax for 2010/11 will be treated as made and falling within the new rules on 6 April 2011.
The new legislation will ensure that where an employee or director receives something which is substantially a reward or loan in connection with the employment, an income tax charge arises.