What will the Loan Charge Figure actually be?

[mayfire]

Yes please the link to the calculator would be greatly appreciated.



Thank you for all of that it’s very helpful. I’m still confused, I don’t think that confusion will ever be resolved.

I have total loans amounts of 170k over 3.5 years, ending in March 2016. From what I can work out, settlement may cost me around 70k...(including interest etc)
The loan charge, I am still unsure as haven’t used the calculator yet, but I assume will be about 85k if it is 45% ish of the total loan.

Not a vast difference, still a considerable sum but perhaps risking having to pay a bit more and face the loan charge in hope it will be amended may be worth it?

One major thing that is inclining me to settle is this ‘come for more’ which is being mentioned. If paying the loan charge does not mean my loan amount won’t be added to another tax year (as loan is still outstanding?) then what is the point? As I said, I’m very confused.

[me206et]

Loan charge calculator

Yes please the link to the calculator would be greatly appreciated.

Yes. If there is a working and fairly accurate calculator out there would be useful for a link that works.
A lot of people need to decide whether to settle or await the charge.
Knowing the figures would be a great help.

[Iter]

When working out the income/ tax already received and paid in a particular year, would dividends also be counted? Part of the time using a scheme was when I was LTD. When giving figures should I even mention this, they would have rec all the returns anyway. If divi is included in income originally received then it may mean the loans are taxed at 40% rather than at a proportioned 20%....

[Groundhogdays]

When working out the income/ tax already received and paid in a particular year, would dividends also be counted? Part of the time using a scheme was when I was LTD. When giving figures should I even mention this, they would have rec all the returns anyway. If divi is included in income originally received then it may mean the loans are taxed at 40% rather than at a proportioned 20%....

Yep, that's the sort of thing that can bring out hidden costs if one goes in blind to settlement. And if one is pushed into the higher tax band overall, apart from upping the income tax does that also affect personal allowance for that year (or years) in question?


Someone on this forum also mentioned that pre-2011 loans might not require NICs inclusion for some reason to do with when prospective legislation was brought in at that time. I'm trying to find that post again, but does anyone else know anything about the context for that - is that a correct interpretation in terms of settlement and/or loan charge? It could make a big difference if one only had to contemplate the additional income tax.

[webberg]

I'll check with the mods and if they are OK, I'll put up a link to the calculator.

I also recall that another poster put up a settlement calculator a few months ago which was pretty good.

[dammit chloe]

Yep, that's the sort of thing that can bring out hidden costs if one goes in blind to settlement. And if one is pushed into the higher tax band overall, apart from upping the income tax does that also affect personal allowance for that year (or years) in question?


Someone on this forum also mentioned that pre-2011 loans might not require NICs inclusion for some reason to do with when prospective legislation was brought in at that time. I'm trying to find that post again, but does anyone else know anything about the context for that - is that a correct interpretation in terms of settlement and/or loan charge? It could make a big difference if one only had to contemplate the additional income tax.

I saw that posting too. However I have not seen any mention of it being the case anywhere else. Maybe to do with an earlier settlement opportunity?

But yes, would make a significant difference.

[Groundhogdays]

I saw that posting too. However I have not seen any mention of it being the case anywhere else. Maybe to do with an earlier settlement opportunity?

But yes, would make a significant difference.

It might feel like the difference between being reversed over, when you've already been run over, but I'd 'settle for that' if there was no other way...

I'm still not 100% convinced that it has to be a case of only settlement or loan charge, if there was just a way to freeze the effect of the latter, until it can be challenged fairly. Right or wrong, there should be an outcome that doesn't destroy people's livelihood or retirement, nor put families at risk. If HMRC are so damned keen on charging IHT, then for those who cannot pay under any current circumstances, why can't these liabilities at least be paid as part of someone's estate upon death?

Oh, I forgot - no charge, if one shuffles this mortal coil. That wouldn't do.

[Groundhogdays]

It might feel like the difference between being reversed over, when you've already been run over, but I'd 'settle for that' if there was no other way...

I'm still not 100% convinced that it has to be a case of only settlement or loan charge, if there was just a way to freeze the effect of the latter, until it can be challenged fairly. Right or wrong, there should be an outcome that doesn't destroy people's livelihood or retirement, nor put families at risk. If HMRC are so damned keen on charging IHT, then for those who cannot pay under any current circumstances, why can't these liabilities at least be paid as part of someone's estate upon death?

Oh, I forgot - no charge, if one shuffles this mortal coil. That wouldn't do.

* On another note, for those who are really suffering I can only say that I have experienced worse life circumstances than this with a loved one quite recently, and we came through. No way am I advocating to do something rash - every life matters.

[RickG]

I'm still not 100% convinced that it has to be a case of only settlement or loan charge, if there was just a way to freeze the effect of the latter, until it can be challenged fairly.

There seems to be a lot of talk about the LC "hitting in Apr 2019", about it being a charge on the loan and not related to the tax which is due, and that hmrc can come back for more later.

However, if you read the government's own page on Disguised Remuneration, whilst it is deliberately vague on many points, it does indicate that there is a due process which is followed when applying the loan charge. It talks about going after employers. It talks about transferring liability. It talks about open and closed years.

I think there's a deliberate attempt to portray the loan charge as something which is outside normal tax law and is applied without any of the usual rules you'd associate with other taxes. And I believe the deception is aimed at trying to obtain as many settlements as possible.

[Groundhogdays]

There seems to be a lot of talk about the LC "hitting in Apr 2019", about it being a charge on the loan and not related to the tax which is due, and that hmrc can come back for more later.

However, if you read the government's own page on Disguised Remuneration, whilst it is deliberately vague on many points, it does indicate that there is a due process which is followed when applying the loan charge. It talks about going after employers. It talks about transferring liability. It talks about open and closed years.

I think there's a deliberate attempt to portray the loan charge as something which is outside normal tax law and is applied without any of the usual rules you'd associate with other taxes. And I believe the deception is aimed at trying to obtain as many settlements as possible.

All the more reason to obtain a legalfreeze on the charge, until it can be properly challenged on its emerging weak points, whatever they may be...

...so, settlement, loan charge, or a 'third way'. I'm not saying the latter doesn't carry risk, as HMRC will pull out every trick in the book, including more legislation, to protect the bounty they've promised Tory High Command.