Finance (No 2) Act 2017 introduced measures that permit HMRC to tax any outstanding EBT loans made since 6 April 1999 on the basis that a non-repayable loan it not a loan, but is disguised pay.

A Loan Charge will apply to outstanding Disguised Remuneration loans.

Typically these loans were made via Employee Benefit trusts (EBTs) or via employment intermediaries as part of a contrator's pay package.

The loan charge does not apply to normal employee loans that are repaid, e.g. a season ticket loan.

The Loan charge applies to a loan (or loan transfer arrangement) where:

  • If it had been made on 5 April 2019 it would have fallen within the disguised remuneration rules (including the Finance Bill 2016 and 2017 changes);
  • It was made on or after 6 April 1999; and the loan, or part of it, is still outstanding at 5 April 2019.

The charge will not apply if by 5 April 2019:

  • The loan is repaid in full;
  • The loan is from an amount on which income tax has been accounted for in full (including under settlement with HMRC); or
  • The loan has been taxed in full under the disguised remuneration rules, or
  • If any exclusions apply.

The Loan Charge is introduced by Schedule 11 Finance (No. 2) Act 2017

What to do now?

HMRC has announced a new Settlement Opportunity for these loans. If that is not taken up and a loan is still outstanding at 5 April 2019, the taxpayer will presumably be allowed to make a time to pay agreement, although more interest will be charged.


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