As reported previously, the loan charge, which came into effect on 6 April applied to anyone who used disguised remuneration schemes. The legislation added a 45% non-refundable charge on all loans advanced through the schemes – some of them dating back 20 years – unless the individual had agreed with HMRC to settle their tax affairs by 5 April.
Following an independent review, the government has now announced a package of changes, the main points of which are:
- This will apply only to outstanding loans made on, or after, 9 December 2010
- Will not apply to outstanding loans made in any tax years before 6 April 2016 where the avoidance scheme use was fully disclosed to HMRC, and HMRC failed to take action.
There are also changes to payment schedules, and more flexibility re payment options.
Legislation to enact the above changes will be put to parliament in 2020.
If you need help with the “loan charge” or any other particular tax issues, please contact a member of our Private Client Team on 01788 539000.