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Following the release of the report on the review of the loan charge in December, HMRC have now issued draft legislation to implement the proposed changes to the charge and updated guidance notes.

The independent review of the disguised remuneration loan charge at the end of 2019 proposed changes to the scope of the charge. This included a mechanism to spread loans over several tax years and time to pay for those with lower incomes. These changes have all been incorporated into the draft legislation. This means that once this is passed into law:

The HMRC guidance gives further details about what “reasonably disclosed” means.

The spreading election must be made on the online additional information form which was issued to allow initial reporting of the charge. This was originally due by 1 October 2019, but has now been extended to 30 September 2020. The form requires amendment and will not be ready to use until April 2020.

HMRC have advised that anyone who had loans in the 2010/11 tax year who is unable to identify pre and post 9 December 2010 loans having checked bank statements, loan agreements and contracts, may apportion their outstanding loan balance on a just and reasonable basis.

They have also advised, for those in employment related schemes where the loan charge was processed as required through the April 2019 payroll that:

Links to our guides:

Loan charge & disguised remuneration? Start here...

Disguised remuneration loan charge (subscriber guide)

FAQs for Disguised Remuneration Settlements (subscriber version)

External links:

Find out how the changes to the loan charge affect you

Disguised remuneration: independent loan charge review

Implementation of changes to the loan charge