Remuneration Trusts - Anyone heard of them?

groundy

I have been approached by one of my clients who decided to google how to save tax as he believes there must be more ways than I already have offered him.

He has emailed me today with the details of a remuneration trust. Basically, as far as I can see the company and any assets are put into trust and the directors are no longer paid a wage. This apparently removes the burden of income tax. Remuneration is then paid by way of loans that are interest free and with no capital repayment until the directors death at which point the loans are repaid from the estate. Any underpayment is written off by the trust at death. This apparently also avoids inheritance tax as the named trustees (ie family of director), continue to receive an income from the trust.

Hope this makes sense, as not sure it does to me. The company offering this service have explained that this scheme is notified to HMRC upon commencement and has never been challenged. They also explain that due to the top lawyers and barristers being used there is a set up cost of £30,000 plus 10% of any credits to the trust as a management fee.

Just wondered if anybody had come across this before.

Cheers

Ste

deanshepherd

Yep, EBTs and EFRBS were the two most common forms. Unfortunately both legislated against in the last finance act so no longer available from today!

groundy

Hi Dean S

Thanks for the reply. However, my client has been assured that this is a Remuneration Trust and not an employee benefit scheme or a retirement benefit scheme.

Has anyone come across one of these as I am very sceptical at the moment and one of the directors appears a bit to keen for me.

Cheers for any help

burg

I don't have any experience of these but a quick Aweb search gives this http://www.accountingweb.co.uk/anyanswers/remuneration-trust