Budget 2011 - Employment Update

KEY MEASURES:

Disguised Remuneration

The Government announced in December 2010 that anti-avoidance legislation will be introduced in Finance Bill 2011 concerning third party arrangements used to avoid, reduce or defer liabilities to income tax and NICs on rewards from employment or to avoid restrictions on pensions tax relief.

A new income tax charge will apply where a third party provides an employee with reward, recognition or a loan in connection with the employee's employment. The Government has stated that third party arrangements that do not amount to tax avoidance will be excluded "in so far as this is possible without creating additional avoidance risks".

The legislation will apply to arrangements involving trusts or other third parties where: