Written Question: Loan Charges


To ask the Chancellor of the Exchequer, what estimate his Department has made of the number of people in the Aberdeen South constituency affected by the 2019 Loan Charge. (195124)

Tabled on: 23 November 2018

Answer - Mel Stride:

The 2019 loan charge is targeted at disguised remuneration (DR) schemes. These are artificial tax avoidance schemes where earnings are paid in the form of non-repayable loans made by a third party.

DR schemes are contrived arrangements that pay loans in place of ordinary remuneration with the sole purpose of avoiding income tax and National Insurance contributions. When taking into account the loan they received, loan scheme users have on average twice as much income as the average UK taxpayer.

Since the announcement of the 2019 loan charge at Budget 2016, HMRC has agreed settlements on disguised remuneration schemes with employers and individuals of over 650 million pounds. More than 90% of this amount was collected from employers, with less than 10% from individuals.

HMRC have also simplified the process for those who choose to settle their use of avoidance schemes before the charge arises, so that those earning less than £50,000 a year and no longer engaging in tax avoidance can agree a payment plan of up to five years without the need for detailed supporting information. There is no maximum period within which an overall settlement can be agreed, and HMRC will deal with individual cases appropriately and sympathetically.

50,000 individuals are estimated to be affected by the introduction of the DR loan charge across the UK. Information is not held at constituency level.