Still gathering requirements...
Settling works out more expensive than paying the 2019 loan charge
That is the surprising conclusion after doing a load of worked examples.
You would think having all the loans taxed in a single year 2018/19 would make the loan charger higher than if the loans were taxed in the years they were received, especially if you earn other income in 2018/19.
However, it doesn't work out like that.
The loan charge is just tax & nics on the loans, whereas settling is tax & nics on the loans plus:
- extra tax because, in most cases, HMRC treat the promoters fees (typically 10%) as your income
- accrued interest
(1) & (2) make it significantly more expensive to settle.
Don't ask me to show you the examples. Go and do your own calcs and report back here if you find otherwise.
Last edited by Loan Ranger; 4th March 2017 at 11:26.