Draft legislation published last month has reiterated an aggressive plan to recoup retrospective ‘disguised remuneration’ provided to contractors in the form of contractor loans or employee benefit trusts (EBTs).
All such arrangements made since 9th December 2009 will be subject to immediate income tax and national insurance charges. On the 5th April 2019 any unpaid amounts will attract a combined tax and NI liability of 61% of the loan value!
Old age will not be a defence. Any long term loans where the borrower is expected to die before the liability matures will see a liability of over 147% applied to their estate in some cases.
So if you are aware of any contractors being involved in these schemes either previously or currently, it would be sensible to make them aware of the liability they are accruing.
If you are concerned about the legitimacy of any payroll arrangements used by your workers please make contact with Ship Shape. Our ICAEW accountants can provide a free evaluation and alternative arrangements with Ship Shape Pay if necessary.
Treasury legislation document is available to read here.