A cross-party group of MPs have forced an amendment to the 2019 loan charge legislation, but does it go far enough?
The House of Lords has been critical of the 2019 loan charge, and in January, Sir Ed Davey MP tabled an amendment to the Finance Bill that’s forced the Treasury into reviewing the loan charge’s impact.
The review will reconsider the retrospective element of the legislation. But with the government required to report to Parliament by the end of March, and the loan charge coming into effect on 5 April, will anything change?
HMRC says the loan charge will still apply and they’re “here to help” anybody worried about being able to pay.
The 2019 loan charge will be introduced on 5 April 2019. It’s designed to tackle ‘disguised remuneration’ loan schemes going back as far as April 1999.
Unless you repay the loan or come to a settlement arrangement with HMRC, any outstanding loan will become taxable remuneration on 5 April.
It could affect thousands of contractors and freelancers who were paid this way. As Stephen Lloyd MP mentioned last year, many of these workers acted in ‘good faith’, with schemes promoted and recommended by firms and professionals.
Sir Ed isn’t opposed to the changes, just the retrospective nature of them, saying: “It is simply not acceptable for a government to introduce a law that makes illegal something someone did years ago, when that action was considered legal.”
He’ll be meeting the Chancellor to discuss the review. 30 MPs signed the amendment, and Sir Ed said: “Treasury ministers have a duty to respond seriously and substantively.”
An HMRC spokesperson told FT Adviser that despite the review, nothing’s changed: “The amendment does not change the legislation but will ensure that a review of the impact of the loan charge is published before that date.”
HMRC went on to say that if anybody is worried about being able to pay, they should get in touch with them as soon as possible on 03000 534 226.
Victoria Todd, Head of the Low Incomes Tax Reform Group (LITRG), welcomed the review. But she’s tempered expectations about what will happen next, urging anyone affected to contact HMRC sooner rather than later: “There are a number of options open to HMRC in agreeing a settlement and repayment of any money due. A settlement is only binding once signed by the person and they are free to walk away from discussions at any point before then.”
The LITRG go on to say that there’s no guarantee the review will lead to changes, with there being ‘very little time’ for them to happen.
If you’re affected by the 2019 loan charge, we recommend you discuss your options with a professional adviser.
What do you hope to see from the upcoming government 2019 loan charge review? Let us know in the comments below.
With Simply Business you can build a single self employed insurance policy combining the covers that are relevant to you. Whether it's public liability insurance, professional indemnity or whatever else you need, we'll run you a quick quote online, and let you decide if we're a good fit.Start your quote
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
22 June 2020 • 9-minute read
How to start a clothing business. It can be an all-consuming process but with that first sample run and customer sale comes great…
19 November 2020 • 2-minute read
Landlords could be hit by another massive tax raid, as the Office of Tax Simplification outlines its recommendations for an overhaul of…
6th Floor99 Gresham StreetLondonEC2V 7NG
Sol House29 St Katherine's StreetNorthamptonNN1 2QZ
© Copyright 2021 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.