Earlier this month the pleas to both delay and review the Loan Charge 2019 were rejected in the House of Commons. This rejection means that the charge will remain unchanged with massive repercussions on the effected.
The pleas came as the Loan Charge has caused major negative reaction due to its retrospective nature. People have already been left bankrupt with some taking their own lives due to the huge amount of debt that the charge has caused.
What is the Loan Charge?
The Loan Charge is essentially a way for HMRC to collect taxes that it deems to have been avoided. Specifically through the use of disguised remuneration schemes (often ‘loan’ schemes). This tax collection can go back to the 6th of April 1999 with payment of all owed tax required by the 31st of January 2020, which is the self-assessment tax return deadline. Contractors who have been previously paid through non-compliant umbrella companies using loan schemes are well within the scope of this legislation. Payments via such loan methods are now being treated as income and taxed accordingly.
If you have found yourself in the unfortunate position of having been paid via schemes captured within the scope of the loan charge we would recommend seeking professional legal advice, if you haven’t already. It is vitally important that you DO NOT ignore the loan charge and bury your head in the sand.
What to do if affected?
There is no stopping the Loan Charge. Especially after any hope of delays or reviews were shattered with the rejection of delays or a review in the House of Commons. This means making sure you yourself, as well as any Umbrella company you are paid through, are fully compliant. This is quite simple more important than ever.
If you are currently using a loan scheme it is advisable to leave it as soon as possible. Moving to using a provider who is fully compliant should become an absolute priority. Do not be enticed or pushed towards these schemes. If take home pay sounds too good to be true, it’s likely that it is. Short term gain will come at the expense of severe long term pain.
Exceed Outsourcing has compliance at the very top of their priorities. We can assure all of our customers that our umbrella solutions are fully HMRC compliant. Full income tax and national insurance deductions are made giving you complete peace of mind. Save yourself the worry and choose Exceed Outsourcing for your payroll.