Newsletter issue - January 07.
EFRBS stands for "Employer Financed Retirement Benefit Schemes" and from "A Day" replaced the funded unapproved employer pensions.
These are employer pension schemes and under the "A Day" rules when the company makes a contribution to one, it does not count as a tax deductible expense. However, on the other hand, there is no tax charge on the individual the pension fund relates to. As unregistered schemes, EFRBS are not subject to the new A Day tax rules and so are not subject to the Annual Allowance Charge or the Lifetime Allowance.
Another benefit of using an EFRBS can come when you want to move surplus cash out of your company without incurring a tax cost in taking it out. For example, to ensure when a company is sold with business asset taper relief available and so tax paid at only 10% rather than 40% on any gains, it can be important to ensure the company does not build up assets of an investment nature. So by moving the surplus cash or other investments into the pension fund, you can avoid taking the cash out personally and paying higher rate tax in doing so.
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