TAX NEWS - June 2010

Budget 2010: Employer Financed Retirement Benefits Schemes (EFRBS) clarification

Employer Financed Retirement Benefits Schemes do fall under government anti-forestalling legislation, the Budget confirmed.

An EFRBS - a pension structure which sits outside the UK registered pensions scheme legislative framework - is usually based in an offshore jurisdiction.

There had previously been confusion over whether these could legally be used following anti-forestalling legislation in the Finance Act 2010.

Bluefin said they had been seen as a potential alternative for high earners who would have been affected by the restriction on pension tax relief to be introduced from April 2011.

Bluefin Corporate Consulting head of technical Robin Hames told PP: "EFRBS are definitely caught in the anti-forestalling net. It is remarkably unambiguous.

"At least you have got clarity - from that perspective it is a good thing. If you set one up for this purpose it is not going to work. From our perspective our wait and see policy has worked."

Hewitt principal consultant Tony Baily added: "The government has confirmed that they are reviewing whether EFRBS are tax avoidance vehicles and bringing inheritance tax on trusts into the Disclosure of Tax Avoidance Schemes regime.

"This continues the uncertainty around tax efficient alternatives for pensions for higher earners."