HMRC has issued Spotlight 35: Disguised remuneration: tax avoidance using annuities. This features a scheme which attempts to avoid income tax and NICs by using annuities to pay for services.

This type of scheme is aimed mainly at contractors and involves payment in two parts:

  • A first payment of salary, so small there is no tax or NICS.
  • A second capital payment for a deferred annuity, which is claimed to be non-taxable.

In this Spotlight HMRC state that:

  • In their view such schemes don’t work.
  • Unless the capital sum is paid back in full by 5 April 2019, or you settle with HMRC, the new disguised remuneration loan charge will apply.
  • They will consider applying the GAAR to such arrangements.

An email address is provided for taxpayers who wish to get out of these schemes and don’t already have a contact.


Our guides:

Anti-avoidance: HMRC's spotlights 

Disguised remuneration

HMRC’s Spotlight 35 can be found here