This new charge will apply to certain loans to directors and employees that are still outstanding at 5 April 2019 and new arrangements put in place after that date.
The charge will affect arrangements involving loans made via Employee Benefit Trusts (EBTs) and similar disguised remuneration schemes adjudged by HMRC and the courts to be tax avoidance and liable to PAYE and National Insurance Contributions.
There are new reporting and payment obligations that come into force for employers using such schemes from 5 April 2019. Where the employer does not pay the tax and national insurance the liability can be passed to the individual who benefited from the loan.
Where the individual concerned had taxable income in the 2018/19 tax year of less than £50,000 they will be able to repay the liability over 5 years, and spread over 7 years if their 2018/19 taxable income of less than £30,000.
April 9th, 2019