Guidance

Disguised remuneration: transitional relief on investment growth

Register to settle with HMRC by 31 October 2016 if you want to get transitional relief on your investment growth.

If you want to get transitional relief on investment growth from a disguised remuneration tax avoidance scheme, you must register your interest to settle with HM Revenue and Customs (HMRC) by 31 October 2016.

Transitional relief on investment growth was introduced in Paragraph 59(2) of Schedule 2 to the Finance Act 2011. The government intends to withdraw the transitional relief on 31 March 2017.

Disguised remuneration schemes usually involve an Employee Benefit Trust as a third party.

If you get transitional relief on investment growth you still have to pay tax on the amount that was invested in the scheme, but can get relief on any amounts it earned on the original investment.

If you get transitional relief from the disguised remuneration rules, it’s possible that other taxes might still apply to the investment growth.

After you’ve registered you need to send information to HMRC and reach an agreement to settle what you owe.

Register to settle

You need to let HMRC know that you want to settle before 31 October 2016.

If you’re already speaking to someone in HMRC about using a disguised remuneration scheme, or if you have a customer relationship manager, contact them and tell them you want to register.

If not, email ca.admin@hmrc.gov.uk and tell them you want to register. They’ll get back to you, and tell you what to do next.

You’ll need to let HMRC know if you’re going to work out how much you owe, or if you want them to work it out for you.

Work out how much you owe

You need to give HMRC enough information to let them work out how much you owe, or to check your calculation if you’ve done it yourself. The information you need to send is the same in both cases, and you need to submit it by:

  • 31 October 2016 - if you want HMRC to work out how much you owe
  • 31 December 2016 - if you’re working out how much you owe

Information you must provide

You may have to send other information if HMRC asks for it. If this happens, you’ll be given a deadline for your reply.

In all cases, you must send the:

  • name and address of the employer who made the arrangement
  • name of the trusts
  • date the trust settlements were made
  • name of the scheme used and DOTAS number (if you know it)

Additional information employers have to send

If you’re an employer you also have to send:

  • details of contributions to the schemes, including amounts and dates
  • any Corporation Tax deductions made for the contributions, including amounts, dates and accounting periods
  • your company Unique Tax Reference (UTR)
  • your PAYE reference
  • copies of the main trust deed for all trust settlements
  • dates and amounts of sums transferred to the sub-trusts
  • copies of sub-trust deeds
  • confirmation of whether any returns have been made on forms P11D for loans or other benefits provided though the scheme

Additional information individuals have to send

If you’re an individual, or you represent a group of individuals, you also need to send:

  • dates and amounts of sums transferred to the sub-trusts
  • copies of sub-trust deeds
  • confirmation of whether any returns have been made on forms P11D for loans or other benefits provided though the scheme
  • individual UTR for each person who wants to settle

Next steps

HMRC will work with you to agree the final settlement based on what you’ve sent them.

You need to reach a final agreement before 1 April 2017 in order to keep the transitional relief on your investment earnings.

You don’t necessarily have to pay everything you owe by 1 April 2017, you just have to have reached a binding agreement with HMRC of how to proceed.

Published 31 August 2016