Beating tax avoidance schemes
The government cracks down on schemes designed to avoid income tax and National Insurance contributions.
08:15 20 June 2004
The government is cracking down on schemes designed to avoid income tax and National Insurance contributions.
Each year such avoidance tactics costs the government as estimated 300 million.
The transactions and initiatives use gilts and shares acquired from Inland Revenue approved Share Schemes to avoid the paying the nationwide taxes.
The schemes are seen as an attack by those intent on "cash bonus planning" so as to avoid the rules that govern all tax and employment-related securities.
For example, one scheme uses a complex mixture of government gilts, loans and a special purpose corporate vehicle to disguise the cash bonuses to avoid taxes.
Another scheme uses shares acquired from an Inland Revenue approved Company Share Option Plan to give a cash bonus to employees free of tax and National Insurance contributions.
All schemes have been blocked with immediate effect, and the Government has tabled the necessary amendments to the current Finance Bill.
It follows similar scheme closures on May 7th.