Members advised to seek independent tax advice on loan charge
10 Apr 2019
The RCS has been made aware that some members have been unexpectedly affected by the new loan charge effective 5 April 2019.
HMRC are taking action against certain loan arrangements (‘disguised remuneration’ schemes) that were considered legal tax planning by users and disclosed on tax returns. Now however, many face potentially huge bills to pay as from 5 April 2019 any outstanding loans will be added together with their income and taxed in a single year often pushing them into the higher tax band.
We would advise members to look at past tax arrangements to ensure they are not caught by the loan charge. Those most likely to be affected will have been employed through agencies or operating through personal service companies. This retrospective legislation goes back 20 years and will impact both retired and working members who still have loans outstanding from the arrangements as of 5 April 2019.
Many agency or locum workers may have had little choice to participate in such schemes if they wanted to work and others were sold the arrangements through their accountants in mass marketed arrangements known as Employee Benefit Trusts.
The RCS is advising members who think they are affected or have received loan charge letters to seek urgent independent tax advice with regard to their position on the loan charge and in contacting HMRC.
Information & Support:
Independent Health Professionals Association
Loan Charge Action Group