Norla EBT Loan Scheme

[shadaz]

Contractor58,

Did you ever get a definitive answer on this?

I used Edge / Norla last year. I haven't received an HMRC letter (like Gizza did) but am nervous as to what might happen with that. I'm also starting a new contract soon and was going to go via the EBT route again but am having second thoughts now.

Hi did you ever receive a letter from HMRC?

[shadaz]

Hey scott_free, any updates on your situation? I'm trying to get my loan written off (I would rather pay PAYE on it than have it hanging over my head) but the trust are refusing to do it. What is happening with you?

Does anyone else know whether the trust is able to do this, and if so how I can "declare" the income otherwise? I'm not sure that just putting it on my self assessment will work, unless the loan is cancelled too, otherwise I think I will just get a big tax bill and still have the loan outstanding.

Interesting - maybe they are less than helpful now you have left the scheme.

[Fairweather]

Hello all.

I just signed up having read this thread as I fit some of the criteria. Now, be nice to the new boy.

Firstly I've been with norla just over 2 years now. And I received a letter from HM Rev' a month ago relating to my tax return from for the year ending Apr 08.

I've since spoken to Edge's (who seem to do norla's payroll) accountants who say they're in discussions with HM Rev regarding their challenge, but that this is par for the course and they do it every other year or so to most schemes and that the letter received is just part of the process. The accountant also said that the BIK only stays on your return for the year you're employed. The plan is the loan is never recalled as trustee law saws the Trustees must do their best for the members - and that wouldn't include recalling the loan.

There seems to be a lot of negitivity about these schemes, but I know a lot of people who use them through Norla, Steed, DMS etc and have done so for years. Granted letters from the HM Rev are a little unsettling but if the schemes have previously been approved by HM Rev then why not make the most out of it that you can.

[shadaz]

Hello all.

I just signed up having read this thread as I fit some of the criteria. Now, be nice to the new boy.

Firstly I've been with norla just over 2 years now. And I received a letter from HM Rev' a month ago relating to my tax return from for the year ending Apr 08.

I've since spoken to Edge's (who seem to do norla's payroll) accountants who say they're in discussions with HM Rev regarding their challenge, but that this is par for the course and they do it every other year or so to most schemes and that the letter received is just part of the process. The accountant also said that the BIK only stays on your return for the year you're employed. The plan is the loan is never recalled as trustee law saws the Trustees must do their best for the members - and that wouldn't include recalling the loan.

There seems to be a lot of negitivity about these schemes, but I know a lot of people who use them through Norla, Steed, DMS etc and have done so for years. Granted letters from the HM Rev are a little unsettling but if the schemes have previously been approved by HM Rev then why not make the most out of it that you can.

the Norla scheme loan is for 80 years. Do you know how this affects your relatives when you die - will they be asked to pay back the loan from your esatate?

[sal626]

The scheme has not been previously approved by HMRC, it has simply been registered with them. However, this does not mean that the scheme does not work if you are getting enquiry letters. In fact, there are two special commissioner rulings against HMRC on these schemes….

[Speedysloth]

the Norla scheme loan is for 80 years. Do you know how this affects your relatives when you die - will they be asked to pay back the loan from your esatate?

I can't speak for Norla but I'm with another EBT Provider and I was bloody anal about all this before signing up so here's what I found out on my own (never trust the salesman!)... The trustees (who issue the loan) pay us (the beneficiaries). The trustees legally have to always act in the best interests of the trustees, which would mean that they could only recall if it was deemed in our best interests to do so.

The trick is that all decendents, spouses or dependants also become beneficiaries, so that if anything happens to me, the trustees would have to act in my wife's best interests (poor sods) as she is the sole beneficiary of my will. THIS would mean that the loan is either written off after I kick the bucket (and my tax affairs have been settled) meaning no tax liability, or it is marked against my inheritance tax to lower the value of my estate and then written off afterwards.

I hope this info helps you guys out!

Cheers

Speedy

[Lewis]

THIS would mean that the loan is either written off after I kick the bucket (and my tax affairs have been settled) meaning no tax liability, or it is marked against my inheritance tax to lower the value of my estate and then written off afterwards.

Why on earth would you want to effectively give away all your earnings and then borrow an equivalent amount which gets repaid out of your estate when you die.

Dependents are called dependents for a reason, leaving them with a hugely reduced inheritance just to save a few grand while you are alive seems a bit selfish. No doubt you don't believe this will happen, yet you acknowledge it as a possiblity, e.g. if you are in it for three years, your dependends could have around £300K taken from your estate (assuming most contractors earn around £100K) yet you have only saved around £45K (assuming you get an extra 15% take home via EBT).

What happens if/when you have children? Or if you estate can't cover the value of the loans?

[Speedysloth]

I'm sorry if I wasnt too clear (I'm normally locked in a server cupboard, so i'm not used to talking to real people )

After I die (hopefully a long way away) my family will need to do a last tax return. The estate is then valued and the value of the loan is offset against it for the calculation of inheritance tax.

After this point the loan is THEN written off but as I have kicked the proverbial bucket and the tax return has been completed, then there is no resulting tax liability, so there is no cost to my wife and she gets the maximum inheritance as she pays the minimum tax on it.

[Lewis]

I'm sorry if I wasnt too clear (I'm normally locked in a server cupboard, so i'm not used to talking to real people )

After I die (hopefully a long way away) my family will need to do a last tax return. The estate is then valued and the value of the loan is offset against it for the calculation of inheritance tax.

After this point the loan is THEN written off but as I have kicked the proverbial bucket and the tax return has been completed, then there is no resulting tax liability, so there is no cost to my wife and she gets the maximum inheritance as she pays the minimum tax on it.

That sounds a little better

[Speedysloth]

That sounds a little better

lol well if I can answer anything else about the EBTs just ask. Since finding the boards I've seen them slated everywhere, but if by answering a few questions I can set a few peoples mind at ease about them then i'd be happy to do so.

The people i'm working through have been nothing if not helpful when i've had questions for them so its the least I can do to pass on the favour...