Writing in diary

Updates to the Loan Charge

Deadlines bought forward

Caroline Harwood, Head of Share Plans and Employers Tax
02/09/2020
Writing in diary

Legislation was enacted to counter specific forms of tax-avoidance using arrangements which were caught by the rules on ‘disguised remuneration’. The government has since brought forward a set of disclosure rules which require taxpayers to inform HMRC of any such arrangements, to which they were parties and settle any income tax and National Insurance Contributions (NICs) due via a one-off charge referred to as the ‘Loan Charge’. Following a review conducted by Sir Amyas Morse, some amendments were made to the Loan Charge proposals. 

Update

A summary of the key points that affected taxpayers need to note are as follows:

  • HMRC require any outstanding disguised remuneration loans to be reported to them by 30 September 2020 using an online form
  • the Loan Charge also needed to have been reported on the taxpayer’s 2018/19 Self-Assessment Tax Return
  • the Loan Charge will apply to outstanding loans made on, or after 9 December 2010
  • taxpayers have the option to spread their disguised remuneration loan balances across three tax years (i.e., 2018/19, 2019/20 and 2020/21) but will need to notify HMRC of the intention to do so, using the above-mentioned online form, by 30 September 2020
  • certain voluntary payments may be refunded where they have been made after 16 March 2016 in relation to loans made in unprotected years (e.g., where HMRC did not open an enquiry into a tax year)
  • paying the Loan Charge does not in itself, resolve a tax dispute with HMRC for the years in which loans were made and where a tax year is the subject of an open enquiry, this would still need to be resolved.

The next steps that taxpayers should take will vary depending on their personal circumstances, and we would be happy to assist clients where possible. For further information, please contact Caroline Harwood, John Cassidy, Russell Kuma, Liam Hawkins or your usual contact at Crowe.

Contact us

Caroline Harwood
Caroline Harwood
Partner, Head of Share Plans and Employment Tax
London