Loan Charge

Oral Answers to Questions — Treasury – in the House of Commons on 9th April 2019.

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Photo of Chris Matheson Chris Matheson Shadow Minister (Cabinet Office)

What representations he has received on the introduction of the 2019 loan charge.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The loan charge was announced at Budget 2016 and was subject to public consultation. We have received representations, including from campaigners and the wider public. Disguised remuneration schemes pay loans in place of ordinary remuneration, with the sole purpose of avoiding income tax and national insurance.

Photo of Chris Matheson Chris Matheson Shadow Minister (Cabinet Office)

I fully support measures to close loopholes for disguised remuneration, but not when they affect my constituents retrospectively. If the loans were illegal at the time my constituents took them out, why is it now necessary to introduce the loan charge?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

It is important that the House fully understands how disguised remuneration works. If, instead of paying an employee their earnings in the normal way, an employer pays them by way of a loan via an offshore trust in a low or no-tax jurisdiction—with no intention of ever repaying the loan and simply to avoid national insurance or income tax—that is wrong. As for the matter of retrospection, that model has never, ever complied with our tax code. The loans to which I refer are persisting today, not retrospectively. That is why it is right—and only fair on those taxpayers who pay the correct amounts at the right time, and on our vital public services, which rely on that money—that we collect it.