The 2019 Loan Charge is HMRC’s next step in their crackdown on tax avoidance. They aim to recover unpaid taxes they deem to be owed by thousands of contractors who have used a disguised remuneration scheme. HMRC will be looking to collect payment for retrospective taxes from any individual who has used a disguised remuneration scheme from 6th April 1999.


How will the 2019 Loan Charge be implemented?

If an individual received a loan that meets the criteria of the new legislation, the loan will be treated as income and will be taxed from the 5th April 2019. The deadline for this payment will be by the 31st January 2020, which is the deadline for self-assessment tax returns. It’s also important to note that HMRC will be taxing individuals at the current income tax rates rather than the previous rates at the time of receiving this pay.


What is a disguised remuneration scheme?

Disguised remuneration schemes including contractor loan schemes are described by HMRC as a method used:

“To avoid the need to pay Income Tax and National Insurance contribution. They normally involve a loan or other payment from a third-party, which is unlikely to ever be repaid. These schemes are used by employers and individuals. If they’re used by contractors, they’re often known as contractor loans.”


What are particular schemes associated with the 2019 Loan Charge?

Individuals who were paid through disguised remuneration schemes such as Employee Benefit Trusts (EBT), Employer Financed Retirement Benefit Schemes (EFRBS) and Contractor Loan Schemes will be targeted by HMRC. However, it is important to note that this is not an extensive list of all the schemes that the 2019 Loan Charge will be pursuing because, during the popularity of these loan schemes, many seemed to appear almost overnight with engaging names to attract business owners and contractors. Nonetheless, it is good to have an idea of the kinds of schemes that HMRC will be turning their attention to.


What to do if you have used a loan scheme?

If you find that you have at some point used a disguised remuneration scheme from any point following the 6th April 1999, there a few options you can take:


1. Postpone the loan charge

If you used a loan scheme between the 6th April 1999 and 9th December 2010, you can register your interest with HMRC to delay the date of payment. However, the deadline to request the postponement for this is the 31st December 2018. Additionally, there are conditions that must apply to you, for your application to be accepted. Cited from, you can only apply to postpone the loan charge payment date if either you:

  • Get approval from HMRC that the loan in question is classed as a qualifying fixed term loan
  • Paid an accelerated payment in respect of the income on which the loan charge is based that is equal to or more than the outstanding loan balance


2. Explore a settlement opportunity

HMRC is offering those who wish to settle their tax affairs to arrange a payment plan for retrospective taxes they owe. Contact HMRC before the 30th September 2018, to register your interest and begin the process of repayment. If you’re not already speaking to someone at HMRC, register your interest by emailing:

If you are a contractor looking to settle your tax affairs, separately to your employer, you must inform HMRC of:

  • Your unique taxpayer reference (UTR)
  • Your National Insurance number
  • The amount of contractor loans or contributions made in each tax year
  • Whether you want to claim a benefit in kind offset – if so, how much and for which years
  • The name of your employer


3. Repay the original loan

If you arrange to repay the loan in cash by the 5th April 2019, providing the original loan provider allows this, you could wipe out any potential tax liabilities you may owe.

For more guidance on recognising disguised remuneration tax avoidance schemes and settling your tax affairs, visit:


Our final piece of advice is that you must not ignore this. If you believe that you have ever used a disguised remuneration loan scheme, failure to address this legislation in lieu will result in further liabilities arising.


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