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Government estimates up to 50,000 affected by disguised remuneration 2019 loan charge

Government estimates up to 50,000 affected by disguis..

Up to 50,000 individuals and their employers could be affected by PAYE and NIC charges that apply to relevant loans outstanding on 5 April 2019.

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Loans from third party structures, such as Employee Benefits Trusts (EBTs), made on or after 6 April 1999 which remain outstanding on 5 April 2019 will attract PAYE, NIC and, where relevant, Apprenticeship Levy charges after that date. In a response to a series of written Parliamentary questions made on 20 June, the Government estimated that up to 50,000 individuals could be affected by this charge.

The ‘2019 loan charge’

It is important to note that:

  • The 2019 loan charge can even apply to remuneration planning that has not been challenged by HMRC in the past, or which has been challenged and a settlement agreed; and
  • Payment of the loan charge will not settle all historic or future liabilities but, in essence, will be treated as a payment on account of them.

The chargeable amount will be the outstanding loan amount as at the end of 5 April 2019.

Loan amounts repaid before then will not be subject to this charge, subject to certain anti-avoidance provisions which are designed to ensure that a genuine repayment has been made.

What do employers need to do?

Businesses that entered into planning arrangements which fall within the scope of the ‘disguised remuneration’ rules, and in relation to which loans remain outstanding, should:

  • Review those arrangements (including the terms of any prior settlement with HMRC in order to understand its implications) and identify any exposure to unanticipated PAYE and NIC liabilities; and
  • Consider whether it would be appropriate to reach settlement with HMRC under the disguised remuneration settlement terms.

Employers who wish to use the disguised remuneration settlement terms should register their interest with HMRC and provide all of the required information by 30 September 2018.

If you have any queries, please get in touch with Jay Lad, your normal contact, or e-mail employersclub@kpmg.co.uk.

For further information please contact:

Jay Lad

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