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What is the 2019 Loan Charge?

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    Originally posted by freddythefrog View Post
    So in summary, LC19 is summing all the outstanding loans of the previous years and applying appropriate tax bands (obviously be hit at 40%)
    Likely that a large part of it will be in the 45% bracket, I'd say.

    Comment


      Originally posted by freddythefrog View Post
      So in summary, LC19 is summing all the outstanding loans of the previous years and applying appropriate tax bands (obviously be hit at 40%). Yes, all the loans are taxed in 2018/19 tax year.
      This would work out better compared to CLSO where there are various years outstanding since 2005/6 in my case.
      However, LC19 is not a final closure - is this because:
      (1) the interest element is not taken into account? But if tax is paid in 2019, than in theory the interest should freeze going forward, should'nt it? ie only interest liable would be from the loan inception year to 2019. LC19 is not final closure because you haven't settled. The enquiries into your tax returns are still open, and theoretically HMRC could continue to pursue you although, in my opinion, that's highly unlikely. I don't know what the interest position, going forward, would be once you've paid LC19. Hopefully it would work as you suggest.
      (2) What about NIC? Does that come into play for LC19? There's no NICs if you were an employee. If you were in a self-employed scheme it looks like there will be class 4 NICs.
      (3) And what about IHT (this is a complete joke in my opinion)? Where does this stand in LC19? As far as I know, LC19 doesn't address IHT.

      Sums wise, LC19 works out better (for me) primarily due to loans are old.
      From from finality point of view, it appears the only option is CLSO - but I do not understand why they are applying IHT as HMRC is classing this whole affair as income.

      Is my understanding correct as I would really welcome your thoughts and comments.
      IHT is complicated and depends on the type of Trust.

      I think IHT only comes into play if you have over £325k of loans, but I could be wrong.
      Last edited by Loan Ranger; 22 February 2018, 09:36.

      Comment


        Originally posted by Loan Ranger View Post
        IHT is complicated and depends on the type of Trust.

        I think IHT only comes into play if you have over £325k of loans, but I could be wrong.
        There is no nil rate band available for exit charges from EBTs for pre DR loans (pre 2011). There is a nil rate band for post DR loans. (post 2011)

        IHT is 0.25% per quarter.

        Comment


          FWIW, I know of 2 people who settled 2008/9 and got the loans written off.

          They didn't pay any IHT.

          Comment


            Originally posted by Loan Ranger View Post
            FWIW, I know of 2 people who settled 2008/9 and got the loans written off.

            They didn't pay any IHT.
            I would question if they had the loan written off but also more importantly what they've told HMRC on that form you need to fill in.
            Of course you don't have to have the loan written off to settle but if you do you need to inform HMRC.

            Comment


              Originally posted by difficulttimes View Post
              I would question if they had the loan written off but also more importantly what they've told HMRC on that form you need to fill in.
              Of course you don't have to have the loan written off to settle but if you do you need to inform HMRC.
              The loans were definitely written off (released) by the trustees.

              Special Investigations, who were dealing with the settlement, weren't interested in IHT.

              One of the people contacted the HMRC IHT dept to find out who was responsible for informing HMRC of the write-off. They said it was the trustees. They also said they didn't think there was any tax liability as the trust is outside the UK.

              Knowing who the trustees are, I reckon there's fat chance they will inform HMRC.

              Comment


                evidence?

                Originally posted by fuhector View Post
                i suspect there are very few schemes, if any, that hmrc are not aware of, even from before dotas started, and they know the names of all your employers going back decades. They have enough info to work out whether you should be declaring loans next year and i would strongly advise against keeping quiet or playing dumb and hoping for the best.
                based on what evidence???

                Comment


                  Originally posted by Finalwhistle View Post
                  based on what evidence???
                  Submit a SAR for all the NI data they hold for you, that will be your evidence.

                  Comment


                    Best way to deal with HMRC

                    I think the best way to deal with the HMRC vultures is NOT to co-operate on ANY level with them. If they want to destroy tens of thousands of peoples lives let them do ALL the work THEMSELVES!
                    After all what they are in effect doing is requesting people provide the rope with which HMRC intend to hang them, makes no sense at all.
                    Creating a debt out of thin air is illegal, retrospectively changing the law is illegal, after all gassing people in concentration camps was legal in WWII Germany because the regime in power decided to change the law to suite their own agenda. It still was illegal!

                    Comment


                      Originally posted by Realist View Post
                      I think the best way to deal with the HMRC vultures is NOT to co-operate on ANY level with them. If they want to destroy tens of thousands of peoples lives let them do ALL the work THEMSELVES!
                      After all what they are in effect doing is requesting people provide the rope with which HMRC intend to hang them, makes no sense at all.
                      Creating a debt out of thin air is illegal, retrospectively changing the law is illegal, after all gassing people in concentration camps was legal in WWII Germany because the regime in power decided to change the law to suite their own agenda. It still was illegal!
                      https://en.wikipedia.org/wiki/Godwin%27s_law

                      Comment

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