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May
16th

DISGUISED REMUNERATION By: Clare

HMRC have made changes to the tax treatment of Employment Benefit Trusts (EBT) and Employer Financed Retirement Benefit Schemes (EFRB). These schemes were originally designed to provide pension benefits for employees. In recent years they have been used to extract profits from owner managed companies with little or no income tax charge. HMRC had made it clear that it disliked this method of extracting profits. The new legislation in the Finance Bill 2011 treats transfers of loans and other assets from EBT’s and EFRB’s as disguised remuneration and enables HMRC to raise income tax and national insurance contributions on these payments. The new legislation will apply from 6 April 2011, with loans made before 9 December 2010 not being caught. Loans made between 10 December 2010 and 6 April 2011 will be subject to a charge under the new rules if they are not repaid by 6 April 2012.
For further information please contact Haxton Chartered Accountants West London.

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