New Finance Bill 2017-18

[starstruck]

Yes. Although as it is self-assessment, you will have to calculate and pay that tax.

Will personal pension payments still be offset against earnings .. and loan amounts?

[ChimpMaster]

It says:

The government has therefore introduced legislation in Finance Bill 2017-18 which prevents section 689 from placing the liability to pay the loan charge onto the UK end client or intermediary where the employer is offshore. Section 689 will not apply to require a UK entity to operate PAYE in respect of the loan charge.

What is your Scheme provider was based in the UK, paid you from the UK and paid loans from the UK. And gave you a contract from the UK?

I think you misread this statement. It means that your end-client (to whom you were contracted) won't be liable for the tax payment. This is what ILikeTax has clarified in his previous post.

So, the contractor is liable for the income tax in all cases. Not sure if he would be liable for Employee NICs or Employer NICs though.

And no mention of IHT anywhere in the Disguised Remuneration section.

[ConfusedEasily]

I think you misread this statement. It means that your end-client (to whom you were contracted) won't be liable for the tax payment. This is what ILikeTax has clarified in his previous post.

So, the contractor is liable for the income tax in all cases. Not sure if he would be liable for Employee NICs or Employer NICs though.

And no mention of IHT anywhere in the Disguised Remuneration section.

IHT will remain unchanged - it depends on the Trust.

"which prevents section 689 from placing the liability to pay the loan charge onto the UK end client or intermediary where the employer is offshore. "

Why would the end client be liable? If you worked for a UK employer then where the employer is offshore then this doesn't apply.

Just to be clear, I'm not naive enough to think that HMRC don't have this situation covered, but ...

[Iliketax]

Will personal pension payments still be offset against earnings .. and loan amounts?

Yes, nothing has changed today.

[Iliketax]

I think you misread this statement. It means that your end-client (to whom you were contracted) won't be liable for the tax payment. This is what ILikeTax has clarified in his previous post.

Yes, that's right.

So, the contractor is liable for the income tax in all cases. Not sure if he would be liable for Employee NICs or Employer NICs though.

If you have an employer that still exists (unlikely in the contractor context) it is liable for the PAYE/NIC in the first instance. It will then try to get the PAYE/employee's NIC back from the individual. There is a penal tax charge if the employer is not reimbursed for the PAYE with 90 days of 5 April 2019.

If the employer no longer exists, the individual is liable for the income tax. The technical note today confirms the employee won't be liable for NIC.

And no mention of IHT anywhere in the Disguised Remuneration section.

Agreed, nothing today says anything about or changes IHT.

[webberg]

The section 689 hosting provision is going to be interesting.

Clearly there is an attempt to isolate anybody with a non UK employer (IOM?).

However most of those had UK PAYE references. Does that make them a UK employer?

Pretty sure HMRC will say "no".

That one is going to run and run.

[Iliketax]

Trying to make sense of this is like trying to learn an alien language.

Can anyone summarise how the loan charge will work in practise? i.e. who is responsible for reporting what? Is reporting via Self Assessment or will HMRC write to individuals? etc.

This you assumes that you were an employee but the employer no longer exists and there is still an outstanding loan:

1. You have to tell HMRC lots of stuff about the loan: See para 35D here: https://publications.parliament.uk/p...7.htm#sch1-pt4

2. This is likely to be on some sort of online form that HMRC will prepare.

3. You need to complete this before 1 October 2019.

4. You need to complete your self-assessment tax return by 31 January 2020.

5. You need to work out how much tax you have to pay and pay this by 31 January 2020.

It will be different if, for example, the employer still exists, you have settled with HMRC and paid the tax, you have paid an APN, etc. You may also have to send info if you have repaid the loan.

The government has said that HMRC will publicise this. I have no idea whether they will write to you. But if they don't write to you the above still applies. It is your responsibilities and there are penalties for not doing it.

[Iliketax]

Clearly there is an attempt to isolate anybody with a non UK employer (IOM?).

I think you may be missing something.

The change has two main impacts:

1. It stops the end-user having to operate PAYE (e.g. the bank that got the benefit of the work done). In practice, these end-users (in almost all cases) knew absolutely nothing about the loan arrangements and who (in almost all cases) did not know that there was an offshore employer when the loans were originally made and (in almost all cases) still know nothing about any loans or any offshore employer. So it is an attempt to protect innocent companies who might be inadvertently caught by other anti-avoidance legislation.

2. It saves the contractor with an offshore employer that no longer exists from having to pay employee's NIC and being at risk of a penal tax charge (e.g. if the end-user did not recover the PAYE promptly). So for someone with a large loan, it means 45% tax rather than 47% or even 67.66%.

So far from isolating anyone, it is protecting people who had nothing to do with the loans and protecting those with offshore employers.

[ChimpMaster]

I think you may be missing something.

The change has two main impacts:

1. It stops the end-user having to operate PAYE (e.g. the bank that got the benefit of the work done). In practice, these end-users (in almost all cases) knew absolutely nothing about the loan arrangements and who (in almost all cases) did not know that there was an offshore employer when the loans were originally made and (in almost all cases) still know nothing about any loans or any offshore employer. So it is an attempt to protect innocent companies who might be inadvertently caught by other anti-avoidance legislation.

2. It saves the contractor with an offshore employer that no longer exists from having to pay employee's NIC and being at risk of a penal tax charge (e.g. if the end-user did not recover the PAYE promptly). So for someone with a large loan, it means 45% tax rather than 47% or even 67.66%.

So far from isolating anyone, it is protecting people who had nothing to do with the loans and protecting those with offshore employers.

And if the employer was UK based, is the result the same? i.e. was the point of s689 just to level the field between onshore and offshore employers.

[Iliketax]

And if the employer was UK based, is the result the same?

Yes. If its gone bust then income tax and no NIC. If the employer is still around then NIC is also due and you risk a penal tax charge if you don't reimburse the employer promptly for the PAYE.