Contractors using certain tax avoidance schemes may soon find their income subject to taxation and National Insurance Contributions due to new laws to be implemented in April.

The Employment Income through Third Parties amendment to the Earnings and Pensions Act is designed to tackle disguised remuneration and subsequently may affect those using trusts and other financial tax avoidance vehicles.

Anti-forestalling provisions were also included in the bill, which means that as of December 9th 2010, contractors using employee benefit trusts (EBT) will see an increase in their tax bills.

Many EBTs take advantage of current tax laws that allow a trust for the benefit of employees to give contractors loans that cannot be paid back and are not subject to income tax and national insurance.

This comes after Dave Chaplin, chief executive officer of Contractor Calculator, said that the current IR35 rules are unfair, leaving wealthy freelancers virtually unharmed while those on more modest rates are controlled by the client.