Loan charge to be reviewed after significant opposition

The National Audit Office (NAO) will lead an independent review of the controversial loan charge after critics raised concerns about the scheme.
The loan charge was first proposed in 2016 to tackle tax-avoiding remuneration arrangements, known as disguised remuneration schemes.
Under such schemes, employers pay workers in loans instead of cash. However, the loans are routed through low-tax jurisdictions and are rarely repaid, meaning the company nor the employee do not have to pay employment taxes.
According to the Government, disguised remuneration schemes have been used by “tens of thousands” of people to avoid paying taxes.
The loan charge scheme gave users three years to either repay the loan or settle the tax due with HMRC, or face an income tax charge on the stock of outstanding loans.
With the charge being backdated as far as 20 years, taxpayers could face seismic penalties in the tens or even hundreds of thousands of pounds.
However, concerns have been raised about the use of the loan charge as a way of “drawing a line” under these schemes, leading to a new independent review of the scheme.
Announcing the inquiry, Financial Secretary to the Treasury Jesse Norman said: “Everyone should pay their fair share of tax. These disguised remuneration schemes are highly contrived attempts to avoid tax, but it is right to consider if the Loan Charge is the appropriate way of tackling them.
“The Government fully appreciates the concerns expressed by individuals, campaigners, and MPs who have raised concerns about the Loan Charge, and the Chancellor has today appointed Sir Amyas Morse, former Comptroller and Auditor General and Chief Executive of the National Audit Office (NAO), to lead an independent review of the policy.”
To learn more about the loan charge review, click here.
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