Whatever walk of life, NHS or Banking, employed or self-employed;
whether you knowingly receive payment in this way, or HMRC have contacted you or not.
- Anyone who has received renumeration as “loans” since December 9th 2010,
- deemed to be outstanding on the 5th April 2019,
- whether or not they have been recalled or paid since 5th April 2019,
- need to enter the total of those loans on the April 2018/2019 tax form
- – yes last Year’s self-assessment form
- If you don’t or have not “settled”, you are liable for penalties potentially as tax fraud;
- HMRC will pursue you or your inheritors,
- even if you had no income or were not even in the UK for the 2018/19 tax year.
Don’t panic, as a concession you now have up to 30th September 2020 to enter or change the loan details on the 2018/19 self-assessment form – whether you;
- have not, or only just heard of the need to declare loans
- did not realise they actually meant all loans summed since December 9th 2010*
- did not take into account the revised rules issued in December 2019* (after the self-assessment forms and instructions had been issued) – see below
- are still waiting for a settlement offer from HMRC – revised ones to be provided by 31st July 2020
- Have been asked to pay back the loan, but it was outstanding on the 5th April 2019.
For information on how to calculate an accurate figure contact us for a spreadsheet which is entirely free. Example;
Exposures vary depending on a number of factors:
|TIme in scheme||Salary £30,000||Salary £40,000||Salary £50,000|
- The Loan Charge has no impact on any loans paid before 10th December 2010
- (enquiries and discoveries on these remain in place but are completely separate from the Loan Charge).
- All loans for the tax year April 2016 to April 2019 need to be included
- Loans between these dates (10th December 2010 and 5th April 2016 inclusive) are included if they were fully disclosed or HMRC have actioned them in any way.
“Actioned” includes if HMRC has issued an enquiry or discovery. We are all awaiting clarity on HMRCs unambiguous interpretation of “actioned” and “fully disclosed”.
Settlement; The HMRC provided an opportunity, for those who were aware before September 2019, to participate in “settlement”. This generally involved a tax figure based on the loans as income in the years they arose, with interest and/or interest being paid. For these people, if their settlements included being excluded from the Loan Charge and/or progressing open items (e.g. enquiries, discoveries, APNs) and/or IHT then the Loan Charge mentioned here will not apply.
Further to the Sir Amyas Morse’s review (see Useful Links below), the HMRC are recalculating settlement figures, whether taken up or proposed, by 31st July 2020, removing;
- loans paid prior to 10th Dec 2010
- loans up to and including 05 April 2016 where there has been full disclosure and no HMRC action has been taken*
*We are awaiting clarity on the HMRC interpretation of this.
Outstanding enquiries & discoveries
The changes do not refer to closing open actions e.g. enquiries. The HMRC has set up a team specifically to deal with pre 10th Dec 2010 loans under this revised direction.
Loan Trusts and companies are selling their “loan books” to companies who are sending out letters for “loan” re-payments, although the loan charge is still due for payment.
We strongly advise you take legal advice from a contract/loan expert before responding to any such request. The Loan charge will still be due as you had the loan on the 5th April 2019 and writing it off in another tax year could incur further tax and/or IHT
HMRC has made no comment on these to date. HMRC justified the loan charge based on the “loans never being repayable”. Logic dictates that either the basis of the legislation is false, and it needs to be revoked, or they are not loans that are repayable so no repayments are needed.