Update from HMRC on the loan charge

Jun 08, 2020

If your clients have outstanding disguised remuneration loans that are subject to the Loan Charge, they must report the details of their loans by 30‌‌ September 2020. Agents can do this for clients using the online form or they can complete it themselves. 

The online form to report disguised remuneration loans has now been updated so that taxpayers can make an election to spread their outstanding loan balance evenly across three years. The three tax years that loans will be spread across are 2018-19, 2019-20 and 2020-21. The deadline to make an election to spread any outstanding disguised remuneration loan balances is currently 30‌‌ September 2020 (subject to potential amendment as a result of the Finance Bill – see later). Please be aware that once an election is made it cannot be withdrawn. 

The form should be complete and accurate to the best of your client’s knowledge. The form can be used to: 

  • report an outstanding loan balance for the first time;  

  • resubmit information to correct inaccuracies in a previous form; and 

  • make an election to spread the loan charge balance. 

If a form has already been submitted on behalf of your client, and the information provided at the time was complete and accurate to the best of their knowledge, they have met their statutory obligation. They are not required to submit another form, even if the outstanding balance has changed following the loan charge review. However, the form must be used to make an election to spread a loan balance. The form allows an individual to make an election without the need to resubmit information previously provided. 

If your client does not wish to elect to spread their loan charge balance, but the balance subject to the loan charge has now changed following the review, the new form can be used to provide the updated loan balance. 

If you need a paper copy of the form, you can call 03000 599110 to ask for one. 

HMRC encourages anyone who thinks they may have difficulties paying what they owe to get in touch, and they will consider their individual circumstances and work with them to agree an affordable payment plan. Please advise anyone with concerns to call HMRC on 03000 599110 or email ca.loancharge@hmrc.gov.uk

Readers are also advised that amendments have been tabled in relation to the loan charge rules arising from the potential impact of COVID 19. If enacted by Parliament, these amendments will allow HMRC to: 

  • extend the deadline for an election to be made to split the loan charge over three years; and  

  • extend the disapplication of interest in respect of liabilities.