On 7th December HMRC has updated Disguised remuneration settlement terms 2020 for tax agents or advisers.
If you’re in a disguised remuneration scheme, there’s guidance on settling your own tax affairs.
The guide can be used to help anyone in these schemes understand how their disguised remuneration liabilities will be calculated under the 2020 settlement terms. They take into account changes to the loan charge following the independent loan charge review, but should be used for settlements in relation to all disguised remuneration liabilities.
The loan charge may apply for outstanding disguised remuneration loans made between and including 9 December 2010 and 5 April 2019. If it applies, the loan charge can be considered as part of the final settlement position. You can find more information about the loan charge in section 14 of this guidance and in Report and account for your disguised remuneration loan charge.
There are some key points in section 14.2 Section 222 of the Income Tax (Earnings and Pensions) Act 2003 – interaction with the loan charge:
A section 222 charge can arise on the loan charge when all the following apply:
* an individual has used an employment based scheme
* their employer was required to account for tax under PAYE on the loan charge income
* the individual, as an employee did not ‘make good’ the tax within the time allowed
We will not collect any section 222 charge on the loan charge income if all the following conditions are met:
* the loan charge arises on an amount subject to an earlier Income Tax liability and that earlier liability did not also give rise to a section 222 charge
* the loan charge has been paid or included within the settlement
* the average annual income provided to the individual through a disguised remuneration scheme is £75,000 or less in each tax year
* no litigation has been started before a court or tribunal in relation to the residual tax or loan charge
Where these conditions are not met, any section 222 charge on the loan charge will need to be paid.
You can read the update in full here.
HMRC also updated quite a few documents in November including Working through an Umbrella Company
and Key Information Document: Guidance for Agency Workers paid through Umbrella Companies
If you have any questions regarding your PSL, have any holiday calculation queries following the Harper Trust v Brazel case or are interested in receiving our Compliance Health Check, please contact us today ☎️ 01252 863700 or email us