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HMRC have released Spotlight 58: 'Disguised remuneration: tax avoidance using unfunded pension arrangements'. This concerns a tax scheme aimed at company owners.

The unfunded pension arrangements used by owner-managed companies and their directors are described as follows: 

It’s claimed that the arrangements result in the director, or a third party closely associated with the director, receiving funds from the company with no immediate liability to Income Tax or National Insurance.

These arrangements often result in unusual outcomes. For example, a spouse agreeing to pay their partner a pension without receiving anything in return.

HMRC's position

HMRC believe these Disguised remuneration arrangements do not work, will challenge promoters and investigate the tax affairs of those using such arrangements. 

Useful guides on this topic

Pension contributions: Personal or company?
Is it more tax efficient to pay pension contributions personally or via your own company?

Pensions: tax rules and planning
What tax rules apply to pensions? What tax relief is available? What tax charges can arise? What planning opportunities are there? 

General Anti-Abuse Rule (GAAR)
What is the GAAR? What taxes does it cover? When might it apply? What tests are considered?  

Disguised Remuneration Zone
What is disguised remuneration? What is the loan charge? How can I settle disguised remuneration, EBT or contractor loans with HMRC? 

External link

Disguised remuneration: tax avoidance using unfunded pension arrangements (Spotlight 58)


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