Originally posted by EBTContractor
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Settling is more expensive that paying the 2019 loan charge
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Does anyone know definitively what HMRC offered during clso? I'm reading here: open years plus interest need to be paid; but no nic or promoters fees on open years and closed years are closed - i.e. Nothing to pay. I'd that right? Badly need this info because I contacted HMRC during clso but they never got back to me.Comment
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Detailed Example
Using tax calculator:
UK Tax Calculator 2017 - Updated for the 2016/2017 and 2017/2018 Tax Year
£200k total loans
£50k received in each of 2005/6, 2006/7, 2007/8, 2008/9
Assuming promoters fee 6%. Grossing up loan, gives approx £53k.
£20k salary in each year, for which PAYE has already been deducted
£50k salary in 2018/19
Settlement now
2005/6
Tax on £20k = £3,000
NICs on £20k = £1,600
Subtotal = £4,600
Tax on £73k = £21,100
NICs on £73k = £3,400
Subtotal = £24,500
Additional tax & NICs = £24,500 - £4,600 = £19,900
Interest @ 43% = £8,500
Subtotal = £28,400
2006/7
Tax on £20k = £3,000
NICs on £20k = £1,600
Subtotal = £4,600
Tax on £73k = £21,000
NICs on £73k = £3,500
Subtotal = £24,500
Additional tax & NICs = £19,900
Interest @ 35% = £7,000
Subtotal = £26,900
2007/8
Tax on £20k = £3,000
NICs on £20k = £1,600
Subtotal = £4,600
Tax on £73k = £20,600
NICs on £73k = £3,600
Subtotal = £24,200
Additional tax & NICs = £19,600
Interest @ 27% = £5,300
Subtotal = £24,900
2008/9
Tax on £20k = £2,800
NICs on £20k = £1,600
Subtotal = £4,400
Tax on £73k = £19,800
NICs on £73k = £4,100
Subtotal = £23,900
Additional tax & NICs = £19,500
Interest @ 22% = £4,300
Subtotal = £23,800
Total additional liability = £104,000
2019 Loan Charge
(Using 2016/17 allowances and bands.)
Tax on £50k = £9,200
NICs on £50k = £4,300
Subtotal = £13,500
Tax on £250k = £98,600
NICs on £250k = £8,300
Subtotal = £106,900
Additional liability = £93,400Last edited by Loan Ranger; 8 March 2017, 10:03.Comment
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Further more (using your figures and same calculator)
Settle 07/08 - £24900
Settle 08/09 - £23800
Then don't bother to pull any salary in 18/19 so £106k declared (guess you could take 5k divs tax free)
Total Tax Deducted £32,300.00
Class 1 National Insurance Deduction £5,640.32
Total Deducted £37,940.32
Total: 86640.32Comment
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Settling later years works out better because the interest is lower.
Approximate percentages, as of end of Feb 2017.
Tax Year..........Accrued Interest
2001/2.................69.3%
2002/3.................62.8%
2003/4.................56.6%
2004/5.................49.2%
2005/6.................42.6%
2006/7.................35.2%
2007/8.................27.3%
2008/9.................22.4%
2009/10...............18.4%
2010/11...............15.4%
2011/12...............12.4%
2012/13................9.4%
2013/14................6.4%Comment
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Originally posted by Loan Ranger View PostSettling later years works out better because the interest is lower.
Interesting times...Comment
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Originally posted by Dylan View PostYup, hence my example settling the last two years and declaring the earlier two on 18/19.
Interesting times...
All of this assumes you've got the money to pay them, of course, which many won't have.Last edited by Loan Ranger; 8 March 2017, 10:46.Comment
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Or repay the £200k loan to the scheme provider in full. They then pay you a pension contribution of £200k.
No loan charge applies.
You have your £200k back, albeit in your pension. Of which 25% can be taken tax free if you are aged 55 or over.Comment
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Originally posted by Whysoserious View PostOr repay the £200k loan to the scheme provider in full. They then pay you a pension contribution of £200k.
No loan charge applies.
You have your £200k back, albeit in your pension. Of which 25% can be taken tax free if you are aged 55 or over.
However, you can carry forward some unused years.
The numbers might add up for some though.Comment
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Originally posted by Whysoserious View PostOr repay the £200k loan to the scheme provider in full. They then pay you a pension contribution of £200k.
No loan charge applies.
You have your £200k back, albeit in your pension. Of which 25% can be taken tax free if you are aged 55 or over.
...the loan charge includes anti-avoidance provisions to prevent the borrower benefiting from any money repaid.
Only genuine repayments are treated as reducing the outstanding loan balance.Comment
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