Amounts saved in FURBS at A-Day will not be tested against the annual and lifetime allowances and the lifetime allowance charge will not apply to them.

When post A-Day benefits are paid out, whether by lump sum or pension, they will be subject to tax but threre is transitional protection - see below.

Employer Financed Retirement Benefits Schemes

Under the new regime:

Employer payments to employer financed retirement benefits schemes are not taxable or liable to National Insurance contributions.
The employer will not get any tax relief on contributions until benefits start to be paid and taxed on the employee.
All investment income and capital gains received by trust based employer financed retirement benefits schemes will be liable at the rate applicable to trusts generally. This means a tax rate of 40% (32.5% on dividends).
Employer financed retirement benefits schemes which are discretionary trusts will be subject to the normal IHT charging rules.
Subject to transitional provisions all benefits paid from an employer financed retirement benefits scheme after A Day will be liable to tax.
Where an unfunded employer financed retirement benefits scheme is concerned, employers will be allowed to continue to provide suitable security and/or underwriting for the promised benefits subject to the individual paying a benefit in kind charge on the cost to the employer of providing the security

Find out more about EFRBS

Transitional Protection for FURBS and UURBS.

FURBS

Contributions can continue to be made - but those made after 5 April 2006 will be treated as indicated above.
Where the employer has not paid into the scheme after 5 April 2006 any lump sum benefit paid will, as a consequence be tax-free.
Where additional contributions are made to a FURBS on or after A Day there will be special provisions applied in respect of the "protected portion" (i.e. the pre A Day fund).
Where the employer has paid into the scheme after 5 April 2006, that part of the lump sum that relates to the market value of the scheme on 5 April 2006 increased by the RPI and any sums paid by the employee after that date will not be taxed.
Where no contributions are paid after 5 April 2006, pre A Day inheritance tax treatment will apply to the 5 April 2006 value of the fund.

UURBS

Any UURBS in place on 5 April 2006 could have been taken into a registered scheme within three months of A Day.
In this instance the increase in the value of the registered scheme will not count towards the member’s Annual Allowance, but will eventually be tested against the Lifetime Allowance.
If the UURBS liability is taken into a registered scheme at any other time it will count against the individuals Annual Allowance in the tax year in which the benefits are included in the registered scheme.