Employee Benefit Trusts – notification deadline
Jul 06, 2018
Key Dates Tax
HMRC have recently published an update to their advice on settling tax liabilities regarding the use of disguised remuneration schemes which involve Employee Benefit Trusts (EBTs) and other similar arrangements.
The outstanding Loan Charge comes into effect on 5 April 2019, and in order to settle on preferential terms before this deadline taxpayers must register with HMRC and provide all of the required information by 30 September 2018.
What is the 2019 Loan Charge?
This is a tax charge on any outstanding loans that exist as a result of a disguised remuneration tax avoidance scheme. It applies to any loans that were taken out under a disguised remuneration scheme since 6 April1999.
The most common schemes were Employee Funded Retirement Benefit Schemes (EFRBS) and Employee Benefit Trusts (EBT). When used for tax avoidance, both involved diverting an employee’s income into a trust. This trust would then ‘loan’ the income back to the employee, meaning that no PAYE and National Insurance tax was paid.
It is the responsibility of an employer/company to pay the 2019 Loan Charge under PAYE legislation. The employer is then expected to pass this cost onto the employee. However, although the responsibility to pay the loan charge initially lies with the employer, HMRC can pass it directly on to the employee who benefitted from the scheme if they don’t receive payment.
If you’re uncertain whether you’ve benefitted from one of these schemes since April 1999, it’s better to contact HMRC to settle your tax affairs now. That way you can be sure what you owe and if required, arrange a payment plan. If you have any queries or concerns, please get in touch and we’ll be happy to help.