Employer-Funded Unapproved Retirement Benefit Scheme (EFURBS - also known as EFRBS)

An EFURBS is often structured as a flexible alternative to an Employee Benefit Scheme (EBT) or UK Registered Pension Scheme (RPS). The principal benefits are wider investment choices and the non-applicability of the annual and lifetime allowances, combined with maximum flexibility to incentivise and retain staff. An EFURBS retains the advantages offered by a pension, but removes a number of onerous restrictions. It can be a useful platform upon which to base a planning strategy.

A new EFURBS set up after April 2006 would benefit from an inheritance tax shelter still available to pre 'A Day' FURBS. Also, since 6 April 2006, company contributions into an EFURBS would not receive any tax relief until benefits are actually paid out of the Scheme. Finally, the member would pay tax when the benefits are paid out of the new Scheme, so there is no longer a tax-free lump sum from a new EFURBS.

Key features

EFURBS are the post 'A Day' version of FURBS. A number of the tax advantages that FURBS enjoyed pre 'A Day', and still may enjoy (see FURBS information) have been terminated. However they still retain unique advantages as shown below.
An EFURBS provides employers an opportunity to reward key personnel through retirement benefits. Most companies and unincorporated businesses can provide these benefits.
For employees who are non-UK domiciled, an EFURBS can be structured as a direct replacement for an International Pension Plan but without the need for an overseas employer.
For employees who are UK domiciled, an EFURBS can be structured to provide an investment fund that may be enhanced in a more advantageous tax environment and which remains outside the individual's inheritance tax estate.
UK Corporation Tax deduction may be available in some circumstances for an EFURBS funding. However, generally UK Corporation Tax deduction will be claimed only when the benefits are provided.
EFURBS are not subject to the Annual Allowance restrictions which apply to UK registered pension schemes. Similarly, the Lifetime Allowance restrictions apply to the total fund, including growth.
There is no requirement to purchase an Annuity when taking benefits.
Funding of an EFURBS should not be taxable as employment income of employees, nor is it subject to National Insurance contributions.
Taxation of pensions and annuities is dependent upon the scheme member's tax residence at the time the benefits are taken.
Taxation of lump sums is also dependent upon the member's tax residence. If a lump sum is taxable in the UK it will be subject to reduction for overseas service.
There is wider flexibility of investment choice, ie guaranteed products, Government Bonds, stocks and shares, residential property, works of art
Investment growth is tax-advantaged. Non-UK income and gains roll up free of UK and Gibraltar tax within an EFURBS established in Gibraltar (UK source income is charged at 40% (50% in 2010), or 32.5% (42.5% from 2010).
Rewards received via an EFURBS may be provided without liability to employer or employee's National Insurance contributions.
An EFURBS can assist with the retention of valued employees, or enhance commitment for a contracted employment period.
Can be particularly useful in the Sports and Entertainment sector.
By combining periods of expected future non-residency, can create a "Gross Pot"
Advice must be taken

Case Studies

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