[UK] Independent Review of the Loan Charge – Further Guidance

Earlier this month, we explained that on the 11th of September 2019 the Chancellor of the Exchequer, Sajid Javid, commissioned an independent review of the disguised remuneration “Loan charge”.  This was carried out by Sir Amyas Morse in autumn 2019 and his report was published at the end of last year. 

The government published its response in December 2019, outlining key changes to the original Loan Charge, estimating that many individuals could be taken out of paying the Charge altogether.

On the 20^th of January 2020, the government published the draft legislation that will be in the finance bill later in 2020.  Some of the changes mean that the Charge will now apply only to loans outstanding at the 5^th of April 2019 that were made on, or after, the 9^th of December 2010.  Furthermore, the Loan Charge will not apply to loans outstanding at the 5^th of April 2019 that were made before the 6^th of April 2016 where the avoidance scheme use was disclosed to HMRC and HMRC did not take action (for example, by opening an enquiry).

All of the changes have effect retrospectively to the 5^th of April 2019, which is the relevant date for the purposes of applying the loan charge.

Also on the 20th of January 2020, the government updated its guidance following the outcome of the review and the response.  This now includes information about accelerated payment notices, Inheritance Tax and disclosure. It includes more information about filing Self-Assessment tax returns, late payment interest and payments on accounts.

Global Payroll Association Comment

We recommend reading the explanatory note to the legislation which is clearer than the legislation itself about the changes being made.

For the many people that are affected we want to detail all of the links to the reports and guidance subsequently issued by HMRC.  We believe that it is these places that payroll professionals should be referring individuals:

 Original HMRC Policy Paper updated on the 7^th of June 2019

• Independent Loan Charge review (on gov.uk), first published on the 11^th of September 2019
• Independent Loan Charge Review report by Sir Amyas Morse
• Government response
• News story following the government’s response
• HMRC and HM Treasury guidance following the government’s response updated 20^th of January 2020
• Policy paper implementing the changes (including links to the draft legislation and the explanatory note)

Earlier this month, we explained that on the 11th of September 2019 the Chancellor of the Exchequer, Sajid Javid, commissioned an independent review of the disguised remuneration “Loan charge”.  This was carried out by Sir Amyas Morse in autumn 2019 and his report was published at the end of last year. 

The government published its response in December 2019, outlining key changes to the original Loan Charge, estimating that many individuals could be taken out of paying the Charge altogether.

On the 20^th of January 2020, the government published the draft legislation that will be in the finance bill later in 2020.  Some of the changes mean that the Charge will now apply only to loans outstanding at the 5^th of April 2019 that were made on, or after, the 9^th of December 2010.  Furthermore, the Loan Charge will not apply to loans outstanding at the 5^th of April 2019 that were made before the 6^th of April 2016 where the avoidance scheme use was disclosed to HMRC and HMRC did not take action (for example, by opening an enquiry).

All of the changes have effect retrospectively to the 5^th of April 2019, which is the relevant date for the purposes of applying the loan charge.

Also on the 20th of January 2020, the government updated its guidance following the outcome of the review and the response.  This now includes information about accelerated payment notices, Inheritance Tax and disclosure. It includes more information about filing Self-Assessment tax returns, late payment interest and payments on accounts.

Global Payroll Association Comment

We recommend reading the explanatory note to the legislation which is clearer than the legislation itself about the changes being made.

For the many people that are affected we want to detail all of the links to the reports and guidance subsequently issued by HMRC.  We believe that it is these places that payroll professionals should be referring individuals:

 Original HMRC Policy Paper updated on the 7^th of June 2019

• Independent Loan Charge review (on gov.uk), first published on the 11^th of September 2019
• Independent Loan Charge Review report by Sir Amyas Morse
• Government response
• News story following the government’s response
• HMRC and HM Treasury guidance following the government’s response updated 20^th of January 2020
• Policy paper implementing the changes (including links to the draft legislation and the explanatory note)