With effect from 6 April 2011, anti-avoidance legislation under the Finance Act 2011 has applied to levy income tax via PAYE on "disguised remuneration" avoidance schemes. It is so broadly drafted that it affects not only the targeted arrangements but also mainstream share plans offering deferred remuneration using employee benefit trusts (EBT's).
Subject to permitted exclusions, when a third party takes a "relevant step" in relation to arrangements for "rewards recognitions or loans" for employees, directors (or their associated persons), a charge to income tax and NICs will arise. The employee to whom the arrangement relates will be liable for the income tax and NICs even if the benefit is applied to another person. The employer will be responsible for employer NICs.
Relevant steps include, amongst other things, earmarking any money or assets, making a payment, transferring an asset, enabling a person to acquire employment-related securities, interests in securities or securities options and/or making an asset available to benefit a taxable recipient.