Disguised remuneration loan charge starts April 2019

29 March 2019

This new charge will apply to certain loans to directors and employees that are still outstanding on Friday 5 April 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 Friday 5 April. 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.

Do you need help on your remuneration loan? 

Contact your usual Ellacotts contact or Ann Bibby on abibby@ellacotts.co.uk or 01295 250401 or fill out our contact form before the charge starts so we can help you.