HMRC extends deadline for settling loan charge to 31 December 2020
HMRC has confirmed that the deadline to report and pay the loan charge or reach settlement has been extended to 31 December 2020. This is good news for anyone caught by the loan charge that didn’t have the opportunity or realise that they needed to bring their tax affairs up to date by 30 September 2020.
Importantly, people affected by the loan charge or disguised remuneration schemes can elect to spread their loan balances over three tax years to minimise their tax liability and avoid higher rates of tax. To take advantage, individuals will need to submit an amended 2018/19 tax return and include a third of the loan amount. HMRC states that the figures should be marked as provisional.
HMRC has also confirmed that anyone that had declared the full loan balance on their 2018/19 tax return can also make a late election to spread the amount over the three tax years.
Time to pay the tax owed can also be negotiated and HMRC has undertaken to allow people earning less than £50,000 in the 2017/18 tax year, a minimum of five years to pay. For anyone earning less than £30,000 in 2017/18, the minimum time permitted to pay is seven years.
There are only five weeks left to take advantage of this offer and anyone affected by this announcement should carefully consider whether to take HMRC up on their offer and seek advice, as needed.
Moore Kingston Smith specialises in advising clients with complex tax issues and historical tax liabilities. We have a wealth of experience in resolving disputes with HMRC and can advise on all aspects of your tax affairs.
Further details of HMRC’s settlement terms can be found here.