The 2019 Loan charge – Have you settled with HMRC yet?

HMRC announced new rules, known as the 2019 loan charge, at Budget 2016, and was introduced in the Finance Act in 2017.

 The rules become effective on 5 April 2019 and would affect taxpayers who, HMRC believe, have used disguised remuneration schemes, such as a loan, to avoid paying tax and National Insurance Contributions.

 The loan charge would apply to all loans made since 6 April 1999, and which remain outstanding.

 The amounts taken as tax-free loans over the years will be put together and taxed as employment income all in one year, 2018/2019- by treating the cumulative amount of the loans as being made on 5 April 2019.

 This mean that only the 2018/2019 personal allowance would be available against the outstanding loans and income. Moreover, these would be taxable at the 2018/2019 rates rather than the rates applicable in the years that the loans were made.

 This could potentially result in a larger tax and National Insurance Contribution liability compared to settling prior to 5 April 2019. The liabilities would be due by 31 January 2020.

 How we could help?

 It is important for affected taxpayers to approach HMRC to agree a settlement before 5 April 2019 as it might be cheaper to do so. We could help by:

1.    Collating all the information to enable us to establish your current position and discuss and agree a plan to settle with HMRC on your behalf;

2.    Provide calculations to HMRC and make representations on your behalf;

3.    Agree the settlement figure with HMRC; and

4.    Where necessary, liaise with HMRC to agree a time to pay.