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HMRC publishes draft legislation for revised loan charge

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HMRC has published draft legislation for Finance Bill 2020 to give effect to changes announced by the government on 20 December in response to recommendations of the independent loan charge review. The legislation amends F(No.2)A 2017 Schs 11 and 12 to:

  • apply the loan charge only to disguised remuneration loans made on or after 9 December 2010 (instead of 6 April 1999);
  • allow taxpayers to split their loan balance over three years by making an election;
  • provide that the loan charge will not apply where taxpayers have made a ‘reasonable disclosure’ in respect of loans made before the 2016/17 tax year and HMRC has not taken action to protect the year;
  • waive late payment interest for taxpayers who file a self-assessment return and pay the tax by 30 September 2020, or arrange with HMRC to do so; and
  • waive late payment interest for 2019/20 payments on account made by 31 January 2021, or included in a payment arrangement by that date.

HMRC will hold an informal four-week consultation on the draft legislation, which is accompanied by explanatory notes and a tax information and impact note. See

The draft legislation does not cover the government’s commitment to enable HMRC to make refunds to taxpayers who have already settled their liabilities for unprotected years no longer in scope of the charge. The required further legislation will be published separately ahead of the Finance Bill.

HMRC has also published supplementary guidance ( on key aspects of the changes, including:

  • apportionment of loans received in 2010/11, but before 9 December 2010;
  • the meaning of ‘disclosure’ for the purposes of determining whether a tax year before 2016/17 is an ‘unprotected year’;
  • completion of additional information forms to make an election to spread outstanding loan balances; and
  • ‘time to pay’ arrangements.

Separate guidance on ‘time to pay’ arrangements with HMRC was published at the same time at

HMRC has updated its guidance ( first issued on 20 December immediately following the review, with more information about filing self-assessment tax returns, waivers of late payment interest and making payments on account. There is further clarification on disclosure and confirmation that no new implications arise for accelerated payment notices or IHT.

Issue: 1472
Categories: News