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June 20, 2019

HMRC updates guidance on disguised remuneration loan charge

Disguised remuneration loan schemes are used to avoid paying Income Tax and National Insurance contributions. HMRC has updated guidance on the disguised remuneration loan charge with information for employees about repaying employers who settle their liability and paying HMRC direct.

HMRC notes that employees are classed as having a disguised remuneration loan, when paid for work or services by receiving a loan or other form of credit in a way that means it is unlikely to be repaid.

Anyone in receipt of a disguised remuneration loan or credit on or after 6 April 1999 that is still outstanding on 5 April 2019 it will be liable to a tax charge, unless tax due has been previously accounted either by the individual or the employer.

This ‘loan charge’ only applies to the tax year 2018 to 2019. Any disguised remuneration income in the form of loans after 5 April 2019, will be liable for income tax and national insurance contributions.

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