Employer financed retirement benefit schemes legislation

An Employer Financed Retirement Benefit Scheme (or “EFRB”) is an unregistered pension scheme set-up by an employer to provide retirement benefits to directors and other senior members of staff.

Members of an EFRB will not receive the statutory protection afforded to beneficiaries of a registered pension but also are not limited by the annual or lifetime allowances which limit contributions to registered pension schemes.

• an EFRB can be run alongside an approved pension scheme, with the conventional protection that exists for such schemes;
• however, the advantage of an EFRB is that it can provide an employer with various reliefs on asset holdings and may prove attractive where an employee/beneficiary who are domiciled overseas or who expect to be tax resident outside of the UK when benefits are drawn.

EFRBs are expensive to set-up and therefore advice from a tax accountant should always be sought before considering such schemes.

In recent years, HMRC have sought to react to any tax schemes entered into which seek to avoid or defer taxes payable by use of an EFRB, which in such circumstances works as a tax avoidance scheme.

At Francis Wilks & Jones we have considerable experience of negotiations with HMRC, including accelerated payment notices, personal liability notices and much more. Please call any member of our tax disputes team for assistance today.