What is an Efrbs?
Employer Financed Retirement Benefit Schemes (EFRBS) are legal trusts that are commonly used by companies as a flexible, tax-efficient way to provide retirement benefits for directors, shareholders and higher-paid employees.
How are Efrbs taxed?
An EFRBS is a scheme that can pay certain retirement or death benefits for employees or former employees called ‘relevant benefits’. When benefits are taken from an EFRBS, any lump sum is treated as employment income and taxable on the employee primarily under PAYE.
How does a Furbs work?
FURBS and EFRBS are trusts used for saving for retirement with fewer restrictions than approved pension schemes. Until their replacement by EFRBS in 2006, FURBS were retirement benefit schemes set up by employers for senior staff members whose remuneration packages exceeded the approved scheme limits.
Is an Efrbs an occupational pension scheme?
Now known as employer-financed retirement benefit schemes (EFRBS), unapproved occupational pension schemes that employers used to set up to provide top-up benefits for employees who were caught by the pensions cap. No new FURBS can be set up since 6 April 2005.
Is my SIPP a registered pension scheme?
Self-Invested Personal Pensions (SIPPs) are a UK-registered personal pension arrangement that is available to both UK residents and expatriates. All UK SIPP providers are regulated by the UK’s Financial Conduct Authority.
Is a Furbs a discretionary trust?
FURBS constructed under discretionary trust arrangements need to be very closely scrutinised, as payments into a truly discretionary trust may escape NICs liability, because at the time the payment is made into the fund it is not a payment made for an individual employee.
What is funded unapproved retirement benefit scheme?
The employer entered into a contractual commitment to pay a pension at retirement, and made payments to fund that pension promise. FURBS were not capable of being approved by HM Revenue & Customs (HMRC), and attracted only limited tax relief.
Do I have to declare SIPP on tax return?
Just like other pensions, investments in SIPPs grow free from Income Tax and Capital Gains Tax. Any money you invest in your SIPP will be topped up by 20% by the taxman, and higher or additional-rate taxpayers can claim back a further 20% or 25% respectively.
Is SIPP a good idea?
A SIPP could help boost your retirement income So, it’s important to consider other pension options to help boost your future retirement income. If you’re paying into a workplace pension and your finances are in good shape, you could increase your contributions. Also, it could be worth having a look at SIPPs.
How does government top up SIPP?
The government pays at least 20% of the total amount you invest in your SIPP. For example, if you pay £800 into your SIPP, the government will top it up to £1,000. They pay 20% of the £1,000 total – a £200 contribution. Essentially, every 80p you pay in is topped up to £1.
What are the disadvantages of a SIPP?
What are the main disadvantages?
- Strict limits on how much tax relief you can get from SIPP savings –
- A lifetime limit of a total of £1,055,000 applies across all your pension funds.
- You risk paying extra fees for both the SIPPs wrapper & underlying investments.
What are the tax implications of an efrbs?
Although an EFRBS is not a tax exempt structure, if an EFRBS is set up offshore, there will be no UK tax payable on income and gains, so to that extent the EFRBS will be in a similar position to a registered pension scheme.
What happens if you use a tax avoidance scheme?
Customers, their advisers and promoters should be aware that HM Revenue and Customs ( HMRC) consider this tax avoidance scheme to be ineffective. This means that HMRC will investigate tax returns where this scheme has been used and seek full settlement of the tax due, plus interest and penalties where appropriate.
What does HMRC’s letter to efrbs companies mean for You?
HMRC is currently sending letters to companies that have made contributions to Employer Financed Retirement Benefit Schemes (EFRBS) that outline an opportunity to settle the taxation treatment of these contributions under one of two possible treatments.
What is a transfer of assets under an efrbs?
As benefits that if paid under the terms of an EFRBS, would likely fall within the employment income charge. So in that context, a ‘transfer of assets’ should be interpreted as a transfer that could give rise to such a charge.