In Finance Bill 2017, HMRC renewed their stated aim of tackling any schemes that had been used by companies to remunerate their employees, or their families, without paying income tax or National Insurance Contributions (‘NIC’).
Under the new rules, where loans have been made by Employee Benefit Trusts (‘EBTs’) or similar structures are still outstanding by midnight on 5 April 2019, they will be taxed as earnings.
HMRC invited businesses to come forward voluntarily and disclose contributions made to EBTs on behalf of employees and to settle the resulting PAYE and NIC liabilities.
The initial announcement stated that companies need to register their interest in settling with HMRC by 31 May 2018.
HMRC have recently scrapped the voluntary registration deadline. However, if no registration has been made by 30 September 2018, HMRC cannot guarantee that they will have settled the EBT tax liabilities before the loan charge is triggered on 5 April 2019.
No charge will arise if the loan is repaid in full by 5 April 2019, the loan has been waived and taxed under the disguised remuneration rules or if a settlement has already been made to HMRC.
Where businesses choose not to register for a settlement, a loan charge on the outstanding loans will arise on 6 April 2019.
For further information and help with EBT questions, please contact the TaxDesk on 0845 4900 509 and ask for Thomas Dalby.