The charge on disguised remuneration (DR) loans will apply to outstanding DR loan balances on 5 April 2019. It is targeted at artificial tax avoidance schemes where earnings were paid in the form of non-repayable loans made by a third party. The loans are provided on terms that mean they are not repaid in practice, so they are no different to normal income and are, and always have been, taxable. The charge on DR loans is expected to raise £3.2bn for the exchequer. The majority, 75%, is expected to come from employers rather than individuals.
The best option for those individuals who are worried about the introduction of the charge on Disguised Remuneration loans is to come forward and speak to HMRC as soon as possible. They will work with all individuals to reach a manageable and sustainable payment plan wherever possible. HMRC has put special arrangements in place so that they are able to agree a payment plan of up to five years automatically for those with income below £50,000 and seven years for those with income below £30,000 where those scheme users are no longer engaging in tax avoidance. HMRC may be able to offer a longer payment plan for those that need more than five or seven years or with income over £50,000, where further information is provided.
The Government estimates that up to 50,000 individuals will be affected by the charge on DR loans, either by settling with HMRC or paying the charge which applies from 05 April 2019. Information is not held at constituency, borough or local authority level.