Spotlight on disguised remuneration schemes

HMRC has published spotlights 35 and 36 on disguised remuneration avoidance schemes .

The first concerns a new scheme that uses annuities as an alternative method of paying people for their services to avoid paying tax and National Insurance on their income. It is aimed mainly at contractors and involves the scheme user being paid in two parts. The first is a salary small enough to attract little or no income tax or National Insurance liability. The second is claimed to be non-taxable on the ground that it is a capital payment for a deferred annuity.

HMRC says schemes involving annuities are within the scope of the proposed new loan charge which will apply to all outstanding disguised remuneration loans on 5 April 2019. So unless the capital sum for a deferred annuity is paid back in full by 5 April 2019 or the individual settles with...