June 07, 2011
The Finance Bill of 2011 was published in March this year but has not yet received Royal Assent. The Bill has, however, already implemented a new Part 7A into the Income Tax (Earnings and Pensions) Act 2003 (Part 7A), designed to ensure that employees cannot evade paying tax and National Insurance on earnings held in trusts or other intermediaries (‘disguised remuneration’.) This disguised remuneration regime came into force on 6 April this year. However, many employees and their advisors have not yet got to grips with it and it has now been criticised by the Chartered Institute of Taxation as being too complicated. The regime is drafted in broad terms, which could also capture employee share plans and employee benefit trusts. This will not only impact on employees but also on employers who could find themselves owing arrears of PAYE to HMRC. Employers who offer employee share schemes and benefit trusts should seek the advice of a commercial or employment solicitor specialising in this area to check that their schemes comply with the rules. Further advice and guidance notes can also be obtained from the HMRC website.