Following the introduction by Finance Act (No2) 2017 of the disguised remuneration loan charge with effect from 6 April 2019, HMRC have issued guidance on how to make an application to postpone the charge.
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.
Most of these loans are from either Employee Benefit Trusts (EBTs) or Employee Funded Retirement Benefit Schemes (EFRBs).
The loan charge can be postponed:
- For loans that are ‘Approved fixed term loans’ on 5 April 2019.
- Where an Accelerated payment has been made and the remaining loan balance is less than or equal to that payment. This means that the loan balance must have been at least partially repaid, as well as an accelerated payment having been made.
Applications for postponement under either provision must be made to HMRC by 31 December 2018.
- Where no accelerated payment has been made HMRC need to give approval that the loan is a qualifying fixed term loan.
- Where an accelerated payment has been made the application for postponement must include a statement from the lender.
- Only the person liable for the charge can apply for postponement. As PAYE applies in most cases where the borrower is an employee this will be the employer.
- The application can be made here.
Those who have already registered to settle their affairs should speak to their HMRC contact about whether they can postpone the loan charge.
HMRC guidance Disguised Remuneration: postponing the loan charge.
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