EFRBS could be hit in review

Employer Financed Retirement Benefit Schemes (EFRBSs) could be hit in a forthcoming government review, it has emerged.

Currently, the pension tax scheme - a type of offshore savings plan – is commonly sold to high net–worth individuals.

Many high-earners are attracted to such a plan as it means they are not liable for income tax or national insurance on employer contributions.

However, independent financial advisors have warned the government may put an end to the scheme, leaving many with a worthless pension plan.

Param Basi, technical pensions director at AWD Chase de Vere, said: "With so much uncertainty hanging over the future of EFRBS we have serious concerns that they are being actively recommended to corporate clients and high earners, when in a few months they may no longer be appropriate."

He added that there is a real fear that employee benefits arrangements will be heavily penalised in the government's imminent review.

"The government will be taking action to prevent efforts to avoid tax and National Insurance Contributions (NICs) on earnings provided through the use of trusts and other vehicles," the HMRC stated.