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Disguised remuneration settlement terms

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HMRC has published guidance explaining how taxpayers should go about registering an interest by 31 May 2018 if they wish to settle liabilities in connection with disguised remuneration schemes on favourable terms. The guidance sets out the information that must be sent to HMRC by 30 September 2018 for settlement to be agreed before the new loan charge comes into effect on 5 April 2019.  

HMRC's detailed terms are set out in separate guidance for agents and advisers. Precise terms will vary depending on whether the taxpayer is a contractor, employer, or employee:

  • contractors: settlement will be net of scheme expenses, with tax applied to all loans or other payments made for the individual’s benefit;
  • employers: settlement will include income tax and primary and secondary class 1 NICs on the amount contributed to, or allocated within, the scheme;
  • employees: settlement will include the same amount of income tax and NICs as if their employer was settling on the amount contributed to, or allocated within, the scheme for their benefit.

Schemes using trusts may also give rise to IHT charges.