The Loan Charge 2019 – How Is It Going To Work?

The Finance (No.2) Act 2017 (FA2), given Royal Assent in November 2017 controversially introduced the ability for HMRC to, in effect, go back 20 years to recover unpaid tax on certain trust based tax mitigation strategies.

In very brief summary, the Loan Charge will apply in circumstances where a trust has been established by a company, through which employees have been remunerated by:

1. A sub-trust being set up in the name of the employee;
2. Monies being paid into the sub-trust by the employer; and
3. Monies being "lent" to the employee from the sub-trust, free of any income tax or NIC.

[NB – this is a very simple explanation. For more detail, see some of our earlier articles referenced below]