HMRC v Forde and McHugh

There are certain pension arrangements which are not set up with the same tax status as registered pension schemes, and so, in particular, contributions to them do not attract tax relief.  However, they are also not subject to the same kind of restrictions applicable to registered pension schemes and are often used to provide supplemental benefits to senior employees whose benefits under registered pension schemes have already exceeded the relevant tax free limits applicable to those schemes. These types of non-registered pension schemes have been known as Funded Unapproved Retirement Benefit Schemes (‘FURBS’) and more latterly as ‘Employer-Financed Retirement Benefits Schemes (‘EFRBS’). 

There has been a question mark over whether or not employer contributions to such arrangements are 'earnings' for the purposes of national insurance legislation (and so attract a liability to pay national insurance contributions on them).  The most recent and lead case on this was heard by the Supreme Court which overturned the judgment of the Court of Appeal on this question. In short, the Supreme Court found that payments into a FURBs were not 'earnings' for NIC purposes and so NICs were not payable on them. This is clearly beneficial for employers and employees who are involved in such arrangements and as is this the lead case in a series of cases on the same issue, there are likely to be a number of subsequent decisions in the near future which use this case as the main authority on this point.