New Treasury rules will “kill off” employer finance retirement benefit schemes and employee benefit trusts, Standard Life says.
In a document on ‘disguised remuneration’, contained in the Finance Bill 2011, the Treasury confirms legislation introduced in the June budget to tackle arrangements using trusts and other vehicles “which seek to avoid, defer or reduce tax liabilities” will incorporate EFRBS and EBTs. As a result, from April 2011 the arrangements will be subject to income tax and national insurance.
However Standard Life says new anti-forestalling rules, which are effective today, will stop any new payments into these schemes.
Head of pensions policy John Lawson (pictured) says: “This announcement marks the end of EFRBS and EBTs. Once the annual pension allowance of £50,000 is used, the most probable form of remuneration for executives will be extra pay or cash bonuses.
“Unfortunately, those who already have money in EFRBS or EBTs will have to pay high administration charges of £5,000 upwards which will eat into their fund value.”