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BUDGET 2011: Green light for ECO schemes

Date: 23 March 2011   |   Author: Rupert Saunders

The government has confirmed that it does not view structured Employee Car Ownership schemes as tax avoidance measured and so they will not be included in anti-avoidance measures announced in the Budget. There had been fears that the schemes, and other salary sacrifice measures, would be targeted.

The move comes after last year's emergency Budget included proposals to tackle "third party arrangements which seek to avoid or defer the payment of income tax or National Insurance contributions".

However, an HMRC document published in conjunction with the Budget, says the government has taken on board lobbying by businesses and professional bodies. As a result it has amended the draft legislation to limit impacts on employers and individuals "where it is possible to identify arrangements that cannot be used for tax avoidance purposes".

The HMRC document confirms that the changes include "arrangements relating to deferred remuneration and defined employee car ownership schemes".

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