HMRC says it appreciates that the 2019 loan charge on outstanding disguised remuneration loans will have a significant impact on some people. It is allowing scheme users to spread their payments over five years if their taxable income in the tax year 2018/19 is estimated to be less than £50,000, as long as they are no longer in avoidance.

Those with higher incomes and those who need to pay over a longer period can also request for extended payment periods, which will be considered on individual circumstances.

The charge on outstanding loans is estimated to apply to up to 50,000 individuals, and is expected to raise £3.2bn in tax. According to HMRC, 65% of those affected work in the business services sector, such as management consultants and IT consultants, while 10% work in construction and fewer than 3% in medical services and teaching.

Based on the information available, HMRC says disguised remuneration schemes users, on average, earned twice as much as the average UK taxpayer, and 70% used these schemes for two years or more.

Scheme users who do not come forward and sign a contract of settlement with HMRC by 5 April 2019 could have to pay more when the loan charge is applied. HMRC is writing to those affected to encourage people to come forward and settle under existing law before the loan charge applies.

Users of disguised remuneration schemes should register their interest as soon as possible. All the information required to settle must be sent to HMRC by 30 September 2018.

HMRC says that since the loan charge was announced, more than 5,000 individuals and employers have agreed to pay the tax they owe, and a further 20,000 people registered an interest in settling.

HMRC issue briefing: disguised remuneration charge on loans is here.

Report by Pat Sweet