Pre-Budget threat to employee benefit trusts warns Aon

The tax advantages of employee benefit trusts could be removed in next week’s pre-Budget report warns Aon.

The consultancy warns that the ability to defer tax on employee benefit trusts, one of the key solutions used to compensate high earners for the impending loss of pension tax advantages, may be removed by the Treasury.

Aon says it has been contacted by a client who has been told by HMRC that it will have to pay immediate income tax and National Insurance charge on contributions into employee benefit trusts. Currently one of the attractions of employee benefit trusts has been the ability to defer tax on contributions in.

Helen Dowsey, principal at Aon says: “It looks like the Revenue is scrutinising employee benefit trusts. A client has flagged up to us that it has been told that tax and NI will be payable immediately and we are wondering whether the Chancellor will be closing that tax advantage in next week’s pre-Budget report.”