TaxPersonal TaxPBR in depth: EBT abuse to be stamped out

PBR in depth: EBT abuse to be stamped out

A government initiative to publish new legislation on employee benefit trusts, announced this afternoon, is aimed at stamping out abuse, according to the Green Budget report.

Link: Pre-Budget special report

EBT are vehicles through which remuneration and other benefits are indirectly paid to employees.

The Inland Revenue has seen evidence that some trusts are being used to avoid paying income tax and national insurance.

The new legislation will defer the contributor’s corporation tax deduction until a payment is made out of the trust.

Tax experts say two categories of employer will be caught by the new rules: entrepreneurial types who set up the trusts offshore but never pay anything out. The second ones are large employers who develop ‘clever’ schemes to get out of paying national insurance.

Sarah Hyde, tax partner at Ernst & Young, said: ‘This is the only way he [Brown] could have stopped the abuse. But we never say die on these things.’

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