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    That's a good attempt at a summary.

    The actual position is more complex and probably makes sense only with a calculator into which your own numbers can be put.

    BG is working on one such and it will be available to members in the next few weeks.
    Best Forum Adviser & Forum Personality of the Year 2018.

    (No, me neither).

    Comment


      As I understand it, the Finance Bill next week will provide more clarity on the 2019 Loan Charge. I'm assuming it will have to, given that they want the Charge in place to tax the 2018/19 year.

      Then the advisors/specialists will have something more concrete to work with, and will be able to make better comparisons with the settlement opportunity.

      Comment


        Originally posted by ChimpMaster View Post
        As I understand it, the Finance Bill next week will provide more clarity on the 2019 Loan Charge. I'm assuming it will have to, given that they want the Charge in place to tax the 2018/19 year.
        No, the 2019 loan charge legislation is in Finance (No 2) Act 2017 which received Royal Assent this morning. The next Finance Bill (to be published on 1 December) is expected to contain some disguised remuneration stuff (close companies' gateway) and also to require a lot more disclosure around the 2019 loan charge. There may also be some other tweaks.

        Comment


          Originally posted by starstruck View Post
          educated guesses from experts are it will be PAYE and NI as if loans were income-ish in 2018/19 tax year; no interest. A large chunk will likely be taxed at higher rate therefore. I say income-ish as experts think it unlikely you will be able to offset pension payments against this as you can with "real" income.
          The Part 7A tax charge is employment income and so relevant UK income. Or in other words you can delete "-ish" as it counts in the same way as normal pay.

          Originally posted by starstruck View Post
          However, the loan change is still very unclear, there are no specifics on how the debt will be transferred from employer to employee or how the numbers should be calculated when done so, so it would appear it is impossible to make a true comparison at this point in time.
          While the calculation of the loan charge, I agree it is not clear how the tax will be collected. This is because, although the normal PAYE rules apply, the government has said that it is considering changing these.

          Originally posted by starstruck View Post
          I can't get much clarity on IHT for either option; ... This part seems to be clear as mud.
          Fair comment. It is very fact specific.

          Comment


            Originally posted by webberg View Post
            There is not as yet any legislation asking for NIC on the 2019 charge.
            Have a look at reg 22B SI 2001/1004. The April 2019 loan charge just piggy-backs off Part 7A and so no new legislation or regulations are required (unless the government decides to transfer liabilities, etc).

            Comment


              Originally posted by Iliketax View Post
              Have a look at reg 22B SI 2001/1004. The April 2019 loan charge just piggy-backs off Part 7A and so no new legislation or regulations are required (unless the government decides to transfer liabilities, etc).
              Do you have a personal opinion on how you believe the transfer will pan out, taking Rangers into consideration?
              STRENGTH - "A river cuts through rock not because of its power, but its persistence"

              Comment


                Originally posted by regron View Post
                Do you have a personal opinion on how you believe the transfer will pan out, taking Rangers into consideration?
                The thing is, if you don't settle now then you will have to pay the Loan Charge anyway. And this could be higher if it includes NICs.

                HMRC are playing a clever game here. The Charge isn't even tax. It's like an APN that HMRC get to keep.

                The point being, is the transfer of liability even an issue now for HMRC? They will get their money from the Loan Charge, so what do they have to worry about?

                Comment


                  Originally posted by regron View Post
                  Do you have a personal opinion on how you believe the transfer will pan out, taking Rangers into consideration?
                  I don't have a view on how NIC will pan out. At the moment, there is no transfer to the individual. If they want to transfer it then Rangers is irrelevant. There is currently a situation where employer's NIC can be transferred to the employee but that requires the consent of the employee.

                  Comment


                    Ok, so based on the above few posts, have I understood correctly?

                    1. Probably no clarity on loan charge workings until Dec.
                    2. Loan charge will be income and so maybe pension payments can be used to reduce tax liability.
                    3. Loan charge may not include NI as that can't be transferred from employer to employee.

                    These last two alone, make a huge difference when comparing settlement vs loan charge!

                    Webberg - you calculator ... if the above is unclear (especially NI) and you said in another recent post "For example, if you have £100 of unpaid loans, then will you be asked to pay tax/NIC on that £100 or will you instead be treated as having received £100 after tax/NIC? Big difference." How can you produce a calculator until these things are clear? Or were you referring to just a settlement calculator?

                    Comment


                      Originally posted by starstruck View Post
                      Ok, so based on the above few posts, have I understood correctly?

                      1. Probably no clarity on loan charge workings until Dec.
                      No. There is clarity on the workings. If £100 of loan then income tax and NIC is on £100. There is no uncertainty. The next Finance Bill is very, very unlikely to change the calculations.

                      What is not clear is what the final mechanism for paying this will be. If the employer is still around, it will definitely be PAYE/NIC. But if the employer has gone bust / has no cash then it is not clear what the mechanism for paying it will be as the government has said it will consult further on this (e.g. will it just become self-assessment).

                      Originally posted by starstruck View Post
                      2. Loan charge will be income and so maybe pension payments can be used to reduce tax liability.
                      Yes, will be income. Personal pension contributions can reduce the overall tax due (there is no "maybe" about it). But don't forget that the annual allowance for 2018/19 could be tapered down to £10,000 (depending on total income, etc).

                      Originally posted by starstruck View Post
                      3. Loan charge may not include NI as that can't be transferred from employer to employee.
                      If the employer is still around, it will definitely include employee's NIC. It is still a guess if the employer is no longer around because of the promised consultation.

                      Comment

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