The Loan Charge: what is it? when will it apply? and when is it due? How do you stop it giving you the January blues?

This is day 2 of our Christmas Advent calendar. We look at Christmas for tax and accounting and this year The Grinch seems to have added a few surprise topics, as we open a 'door' in our calendar to count down the working days until the Christmas holiday in the UK.

What is the loan charge?

The loan charge will apply to all outstanding disguised remuneration loans taken out since 1999 and takes effect on 5 April 2019.

The charge will apply to a loan or quasi-loan (including loan transfer arrangements) where:

  • If it had been made on 5 April 2019 it would have fallen within the Disguised remuneration rules
  • It was made on or after 6 April 1999; and
  • The loan, or part of it, is still outstanding at 5 April 2019.

When will it not apply?

The charge will not apply if by 5 April 2019:

How much is the loan charge and when is it payable?

The charge will be made up of income tax and NIC based on the loan amount for the 2018/19 tax year:

  • Information will have to be provided to HMRC regarding these loans by October 2019 or penalties will apply.
  • The loan charge can be postponed for loans that are ‘approved fixed term loans’ on 5 April 2019 and in some cases where Accelerated Payment Notices have been paid in full. See How to postpone your loan charge.

Links

For more details on Disguised Remuneration and how to settle with HMRC, see our Disguised Remuneration Zone 

Back to our Christmas Advent Calendar