Contractors have until 30th September to settle loans or benefit trusts with HMRC

For those contractors who do have an outstanding loan or benefit trust, they have until 30^thSeptember to register to settle with HMRC.

The FCSA warns that this is because HMRC’s 2019 loan charge is ‘starting to bite’. Under the charge, any contractor loan that is outstanding on 5^thApril 2019 will be treated as taxable remuneration, and contractors will be obliged to pay the tax and NICs incurred.

The amount to be charged depends on the specifics of every case, but according to an online petition, a contractor working for 5 years on a salary of £30,000 could be liable for a sum of around £60,000.

The only way to safeguard against the loan charge is to repay the loan or settle with HMRC; contractors wishing to settle will need to register with HMRC by 30^thSeptember in order to ensure that settlement can be reached prior to the loan charge coming in April 2019.

FCSA’s chief executive Julia Kermode said, “The financial consequences are significant for contractors and I don’t think that HMRC has done enough to publicise the loan charge, nor its impact on contractors. I am very concerned that there are large numbers of people who will be affected by these loan charges who are, as yet, completely unaware, and may miss the opportunity to settle before it is too late.

“The legislation is very broad in scope so it is unlikely that there will be many exceptions, if any. My advice is to be very wary and sceptical if scheme promoters tell you that theirs is not caught by the loan charge and seek independent professional advice.”

To find out more about contracting please contact James on 01442 795 100 or email james.trowell@dolanaccountancy.com.