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HMRC targets contracts for difference schemes

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HMRC has clarified its view that avoidance schemes which seek to treat amounts paid by employers to their employees as gains rather than income are not effective.

Spotlight 59 Employee bonus schemes: growth securities ownership plan (GSOP) tax avoidance and similar schemes update updates HMRC’s position on avoidance schemes using contracts for differences. These schemes attempt to treat payments made by an employer to an employee on the maturity of a contract for difference as a capital gain rather than as employment income – the aim being for the amounts to be taxed at CGT rates rather than being subject to income tax and NICs.

Spotlight 59 confirms HMRC’s position (previously set out in Spotlight 28) following a challenge by users of a growth securities ownership plan (GSOP) scheme which was rejected in two lead cases by the First-tier Tribunal (Jones Bros Ruthin and Britannia Hotels [2022] UKFTT 26 (TC)). The FTT agreed with HMRC that payments made under the GSOP scheme were taxable as employment income and dismissed both appeals.

Issue: 1570
Categories: News