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Disguised remuneration: the new EBT loan charge

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During the 1990s and 2000s, many employers transferred substantial sums to EBTs which then lent the money to chosen employees on an open-ended basis. Initially HMRC litigated some of these loans as effectively earnings. This was not wholly successful and, in 2011, HMRC introduced the ‘disguised remuneration’ regime which effectively halted new loans by EBTs. HMRC now propose a major extension to the scope of the DR regime. There will be a loan release charge for DR loans, which will supplement the existing charges. There may be (but not until next year) a charge on third party payments to participators in close companies, who are also employees. Finally, and most importantly, EBT loans made since 1999 will be liable to income tax and NICs if they are outstanding on 5 April 2019. 

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