Disguised remuneration

HMRC has long sought to ensure that the rewards gained from employment are properly subject to income tax and National Insurance contributions (NICs) deducted by employers through the pay as you earn (PAYE) system.

The disguised remuneration (DR) rules, found at Part 7A to the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) (see Practice Note: Disguised remuneration—structure of the regime and its implications in practice), fully came into force with effect from 6 April 2011, with transitional provisions applying to certain actions taken on or after 9 December 2010 but before 6 April 2011. The rules impose income tax charges on the provision of certain loans and other forms of benefits by third parties to employees.

Although the rules contain a series of exclusions for certain types of deferred remuneration arrangements, share plans and certain employee benefits, the regime applies very broadly and should be considered in the context of all remuneration structures.

Disguised remuneration—pre-enactment tax planning environment

For an explanation of the tax planning environment that preceded the DR rules, see Practice Note: Disguised remuneration—tax planning environment before rules introduced. This

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