{"id":90168,"date":"2025-02-15T18:29:27","date_gmt":"2025-02-15T18:29:27","guid":{"rendered":"https:\/\/peraltafinancing.com\/accounting\/loan-charge-and-disguised-remuneration-2020-guide\/"},"modified":"2025-02-15T18:29:27","modified_gmt":"2025-02-15T18:29:27","slug":"loan-charge-and-disguised-remuneration-2020-guide","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=90168","title":{"rendered":"Loan Charge and Disguised Remuneration 2020 Guide"},"content":{"rendered":"


\n<\/p>\n

New loan charge and disguised remuneration guidance – issued December 2019<\/h2>\n

In December 2019, the Government announced it will make changes to the way it will deal with \u2018disguised remuneration\u2019 via the \u2018loan charge\u2019 rules which have been for some time in the pipeline (and were initially introduced in April 2019).<\/p>\n

The loan charge rules were aimed at individuals who used certain tax avoidance schemes typically involved offshore companies collecting fees for delivery of the individual\u2019s services, and loaning the funds back to the individual. These schemes were sold to people as a way to earn money tax-free.<\/p>\n

By far the largest group of taxpayers affected by the loan charge rules are contractors.<\/p>\n

The change in approach from the Government was in response to an independent review which was commissioned because of widespread criticism of the loan charge rules on the basis that they were unfair on taxpayers in particular because of their retrospective nature.<\/p>\n

What are the changes to loan charges and disguised remuneration?<\/h3>\n
    \n
  1. The biggest change to be announced is that only loans made on or after 9 December 2010 will now be relevant to the loan charge. Previously, all loans made after 6 April 1999 would have been caught.<\/li>\n
  2. Secondly, if any loans made after 9 December 2010 were fully disclosed to HMRC on the tax return submitted at the time and HMRC did not open an enquiry, they do not now have a right to apply the loan charge.<\/li>\n
  3. All loans made after 5 April 2016 will be affected by the loan charge.<\/li>\n
  4. For any loans caught by the charge (up to 2018-2019), taxpayers will be allowed to spread the reporting of additional income over three tax years, 2018-2019, 2019-2020 and 2020-2021. This will help soften the blow of extra tax to pay as a result of the loan charge and reduce the chance of all or most of it being taxed at higher rate.<\/li>\n
  5. Submission of 2018-2019 tax returns reporting loan charge liabilities can be postponed until 30 September 2020.<\/li>\n
  6. Where a taxpayer has agreed a settlement with HMRC in respect of the loan charge, any additional tax that would not be due under the new implementation guidance will be refunded by HMRC.<\/li>\n
  7. Time to pay arrangements for the additional tax are expected to remain available.<\/li>\n<\/ol>\n

    How does this affect me?<\/h3>\n

    Working on the assumption that you know whether you received a loan that is relevant to the loan charge rules, there are various possible scenarios.<\/p>\n

    Firstly, determine when loans were made to you<\/strong>:<\/p>\n