The announcement made this week states that a new Finance Bill will introduce the measures in April 2011. The draft rules include anti-forestalling measures to stop upfront payments or arrangements being made from 9th December and before the legislation takes effect.
According to the Treasury, the legislation will “ensure that where a third party makes provision for what is in substance a reward or recognition or loan in connection with the employee’s employment, an income tax charge arises”. Clearly targetted are those schemes that use employment benefit trusts and loans as part of an arrangement to reduce levels of tax paid. Accordingly this would appear to attack some schemes used to pay agency workers and contractors.
The Treasury estimates that 5,000 employers and 50,000 workers will be affected, as it expects many such schemes to be “discontinued” as a result.
For more information or advice on the application of the new proposals on specific arrangements please call 01273 236236.
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