The charge on disguised remuneration (DR) loans is targeted at artificial tax avoidance schemes where earnings were paid via a third party in the form of ‘loans’. These loans were paid in place of ordinary remuneration, with the sole purpose of avoiding income tax and National Insurance contributions. In reality these loans were never repaid. When taking into account the loan they received, loan scheme users have on average twice as much income as the average UK taxpayer.
The Government estimates that up to 50,000 individuals will be affected by the 2019 loan charge. Information is not held at constituency level.
Since the announcement of the 2019 loan charge at Budget 2016, HMRC has agreed settlements on disguised remuneration schemes with employers and individuals of over 650 million pounds. More than 90% of this amount was collected from employers, with less than 10% from individuals.
HMRC has simplified the process for those who choose to settle their use of avoidance schemes before the charge arises, so that those earning less than £50,000 a year and no longer engaging in tax avoidance can agree a payment plan of up to five years without the need for detailed supporting information. There is no maximum period within which an overall settlement can be agreed, and HMRC will deal with individual cases appropriately and sympathetically.