Key Benefits
The Act takes forward the Paymaster General's announcement of 2 December 2004 that the Government would not tolerate the continuing use of schemes to avoid the payment of income tax and National Insurance Contributions (NICs).
The Act is intended to deter those who have been engaged in tax and NICs avoidance and prevent them from benefiting from lower employment costs than those who do not engage in avoidance. It will have no effect on employers and employees who organise their affairs in a straightforward and ordinary way - the vast majority. In particular, genuine employee share schemes and share option plans will not be affected.
The Act gives the Treasury the power to make anti-avoidance NICs regulations effective from the same date as the anti-avoidance tax measures to ensure that employers and employees using contrived schemes cannot avoid paying their correct NICs liability.
The Act also allows regulations to be made which extend the tax avoidance disclosure rules to NICs avoidance arrangements, and ensures employers cannot pass on their NICs liability on past payments of share based earnings to their employees which are caught by the NICs regulations made under the Act.
The Act safeguards £95 million in NICs in 2004-05 and a further £240 million per annum thereafter. |
