Disguised Remuneration Loan Charge Starts April 2019
This new charge will apply to certain loans to directors and employees that are still outstanding at 5 April 2019 and new arrangements put in place after that date.
The charge affects arrangements involving loans made via Employee Benefit Trusts (EBTs) and similar disguised remuneration schemes adjudged by HMRC and the courts to be tax avoidance and liable to PAYE and National Insurance Contributions.
There are new reporting and payment obligations that come into force for employers using such schemes from 5 April 2019 Where the employer does not pay the tax and national insurance the liability can be passed to the individual who benefited from the loan.
Where the individual concerned had taxable income in the 2018/19 tax year of less than £50,000 they will be able to repay the liability over 5 years, and spread over 7 years if their 2018/19 taxable income is less than £30,000, should they wish to settle with HMRC and withdraw from the tax scheme.
For further information on the Remuneration Loan Charge change, please contact Alan Rolfe on 023 8046 1235.