EFRBS Tax Benefits
There are several EFRBS tax benefits that both, employers and employees, can get on investments made in Employee Funded Retirement Benefit Schemes. These schemes are beneficial for employees who have a cap on the amount that can be invested in registered pension schemes as well as for non-UK domiciled employees. For employers, these unregistered schemes help in reducing corporate tax liability. Here is a look the various tax benefits that employers and employees are eligible for.
No tax deductions on contributions made by employer:
Unlike with regular pension schemes, one of the EFRBS tax benefits that an employer gets is that there are no deductions made on the employer’s contribution to the scheme. In addition, the employer is not liable to contribute to the national insurance scheme.
Corporate tax:
Under this scheme, the employer is eligible for deductions when assets in the fund are transferred or a payout is made to the employee. Although this EFRBS tax benefit is not immediate, the employer gets a deferred benefit at the time of payout or transfer.
Exemption from capital gains tax:
When capital assets of the employee that are invested in the scheme are sold, no capital gains tax needs to be paid on the sale proceeds. This is valid even when the EFRBS scheme is located offshore.
Exemption from Inheritance Tax liability:
Another EFRBS tax benefit is that in the event of death of the employee, his heirs are not subject to inheritance tax.
Tax benefits for employees not domiciled in the UK:
Any contribution made to an EFRBS scheme for an employee who is not domiciled in the UK is exempt from taxation under the UK laws. However, remittances or lump sum transfers from EFRBS schemes into the UK will be subject to remittance rules or limits as prescribed by the law.
With proper guidance, EFRBS tax benefits can be used both, by employers and employees, as a means of tax planning. It is advisable to get the help of an expert who knows the various laws related to EFRBS to help understand how these schemes can be used to reduce tax liability. The performance of an EFRBS scheme depends on the sort of investments the funds are put into. EFRBS experts can also provide guidance on the various options of schemes and recommend schemes with the best payouts and those that can ensure safety of the investments.
No tax deductions on contributions made by employer:
Unlike with regular pension schemes, one of the EFRBS tax benefits that an employer gets is that there are no deductions made on the employer’s contribution to the scheme. In addition, the employer is not liable to contribute to the national insurance scheme.
Corporate tax:
Under this scheme, the employer is eligible for deductions when assets in the fund are transferred or a payout is made to the employee. Although this EFRBS tax benefit is not immediate, the employer gets a deferred benefit at the time of payout or transfer.
Exemption from capital gains tax:
When capital assets of the employee that are invested in the scheme are sold, no capital gains tax needs to be paid on the sale proceeds. This is valid even when the EFRBS scheme is located offshore.
Exemption from Inheritance Tax liability:
Another EFRBS tax benefit is that in the event of death of the employee, his heirs are not subject to inheritance tax.
Tax benefits for employees not domiciled in the UK:
Any contribution made to an EFRBS scheme for an employee who is not domiciled in the UK is exempt from taxation under the UK laws. However, remittances or lump sum transfers from EFRBS schemes into the UK will be subject to remittance rules or limits as prescribed by the law.
With proper guidance, EFRBS tax benefits can be used both, by employers and employees, as a means of tax planning. It is advisable to get the help of an expert who knows the various laws related to EFRBS to help understand how these schemes can be used to reduce tax liability. The performance of an EFRBS scheme depends on the sort of investments the funds are put into. EFRBS experts can also provide guidance on the various options of schemes and recommend schemes with the best payouts and those that can ensure safety of the investments.
