George Osborne will look to tighten the rules governing Employer Financed Retirement Benefit Schemes in Wednesday’s Budget, The Sunday Times reports.
The Chancellor (pictured) will say the offshore pension trusts, known as Efrbs, are a form of “disguised remuneration”, the paper says.
The schemes allow companies to claim a corporation tax deduction for employer pension contributions on the basis that either the contribution to the Efrbs or a subsequent transfer to a second Efrbs is a ‘qualifying benefit’.
However, HMRC says neither of these transactions involves a qualifying benefit.
It says: “HMRC will most likely investigate tax returns where these schemes have been used and see full settlement of tax due, plus interest and penalties where appropriate.”
The Sunday Times suggests the trusts will be subject to income tax at up to 50 per cent.