What is the 2019 Loan Charge?

[frodo]

HMRC officials think every year EBT used will be under consideration irrespective including closed years if you've settled already. Obviously APN is a payment on account towards the final bill which will include interest.

SO if for example 200k loans over 3 years from 2005-8 expect a tax bill north of 120k.

Great isn't it :-(

You could always join Big Group in the anticipation that we'll be able to negotiate a better deal with the tax man. But the bottom line is terrifying and will bankrupt thousands.

Their website states: "all loans or debts from a disguised remuneration scheme will be taxed as earnings if they haven’t already been fully taxed or repaid on or before 5 April 2019."


If settling/paying APN isn't paying the "due" tax, what is?

[frodo]

HMRC officials think every year EBT used will be under consideration irrespective including closed years if you've settled already. Obviously APN is a payment on account towards the final bill which will include interest.

SO if for example 200k loans over 3 years from 2005-8 expect a tax bill north of 120k.

Great isn't it :-(

You could always join Big Group in the anticipation that we'll be able to negotiate a better deal with the tax man. But the bottom line is terrifying and will bankrupt thousands.

Could you give a breakdown of that example? What calculation are you basing that on? Where does a 60% tax bill come in to it especially when one has already paid the tax via CLSO/APN?

[DotasScandal]

Could you give a breakdown of that example? What calculation are you basing that on? Where does a 60% tax bill come in to it especially when one has already paid the tax via CLSO/APN?

At the risk of sounding like a broken record: an APN is not a final payment of anything, it's a payment "on account".

[neil99]

I took up the CLSO as it was a small amount and paid tax and interest and have a letter stating that I have settled. - I have no other years in question - Are you stating HMRC will apply another charge to me in 2019?

Any money paid out to you via EBT will attract a change of PAYE and NIC plus backdated interest. The tax will be on EBT loan amounts. Writing off the loans doesn't effect the charge. The other option is to pay back the loans in full.

As Webberg says, that's all we know at the moment until the legislation is published.

[frodo]

At the risk of sounding like a broken record: an APN is not a final payment of anything, it's a payment "on account".

I get that. So they just take the APN money to settle the tax due, right? Job done, less interest and NIC etc. And I still don't get your theoretical 60% tax charge.

[ireland2013]

Any money paid out to you via EBT will attract a change of PAYE and NIC plus backdated interest. The tax will be on EBT loan amounts. Writing off the loans doesn't effect the charge. The other option is to pay back the loans in full.

As Webberg says, that's all we know at the moment until the legislation is published.

But the CLSO stated no NIC would be charged ( if I remember correctly) - this is confusing - thought I had paid tax and interest and matter was finished with - only issue was possible IHT - which was trust specific related.

[neil99]

Could you give a breakdown of that example? What calculation are you basing that on? Where does a 60% tax bill come in to it especially when one has already paid the tax via CLSO/APN?

Ok it's very rough calculation. But say if you had 70k loans each year from 2005/2008 (total loans is £210,000).

You owe roughly 25k in PAYE and NIC per year = approx 75k. Add interest of approx 30% to that.

That's approx £95,000 in tax due. From approx £210,000 in loans.

I used https://listentotaxman.com/25000?yr=2005 to do my 'umble calculations.

[neil99]

I get that. So they just take the APN money to settle the tax due, right? Job done, less interest and NIC etc. And I still don't get your theoretical 60% tax charge.

I tried a calculation and it seems it's nearer 45%. Depending on circumstances etc.

[frodo]

Ok it's very rough calculation. But say if you had 70k loans from 2005/2008 (total 210).

You owe roughly 25k in PAYE and NIC per year = approx 75k. Add interest of approx 30% to that.

That's approx £95,000 in tax due. From approx £210,000 in loans.

I used https://listentotaxman.com/25000?yr=2005 to do my 'umble calculations.

Yes but your post implies that you will be charged irrespective of tax paid via CLSO/APN (yes APN is POA, point is the money is there for HMRC to take if this charge becomes lawful).

[neil99]

But the CLSO stated no NIC would be charged ( if I remember correctly) - this is confusing - thought I had paid tax and interest and matter was finished with - only issue was possible IHT - which was trust specific related.

https://www.gov.uk/government/public...technical-note ...

":b.The loan is from an amount on which income tax has been accounted for in full, including all years settled under HMRC’s recent settlement opportunities, before 5 April 2019"

This para is vague but seems to suggest the charge will apply for closed years (if you have them). Open years settled under the CLSO should attract no further charges. I believe this is the interpretation HMRC have inferred too.