Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of pausing the introduction of the loan charge.

The Government accepted the new clause tabled by Sir Edward Davey which is now section 95 of Finance Act 2019, and will lay a report no later than 30 March 2019. The report will review the effect of changes made to the time limits for recovery or assessment where tax loss arises in relation to offshore tax, and compare these with other legislation including the charge on DR loans. The charge on Disguised Remuneration (DR) loans is unchanged as a result of the Finance Act and will apply to outstanding DR loan balances on 5 April 2019.

DR schemes are contrived arrangements that pay loans in place of ordinary remuneration, with the sole purpose of avoiding income tax and National Insurance contributions.

The charge on DR loans is expected to raise £3.2bn for the exchequer. The majority, 75%, is expected to come from employers rather than individuals.

The best option for those individuals who are worried about the introduction of the charge on Disguised Remuneration loans is to come forward and speak to HM Revenue and Customs as soon as possible. They will work with all individuals to reach a manageable and sustainable payment plan wherever possible.

HMRC has put special arrangements in place so that they are able to agree a payment plan of up to five years automatically for those with income below £50,000 and seven years for those with income below £30,000 where those scheme users are no longer engaging in tax avoidance. HMRC may be able to offer a longer payment plan for those that need more than five or seven years or with income over £50,000, where further information is provided.