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Tax Avoidance

Question for Treasury

UIN 200576, tabled on 10 December 2018

To ask the Chancellor of the Exchequer, what estimate he has made of the number of people who will be affected by the new 2019 loan charge (a) in total and (b) who are public sector workers.

Answered on

13 December 2018

The charge on disguised remuneration (DR) loans is targeted at artificial tax avoidance schemes where earnings were paid via a third party in the form of ‘loans’. These loans were paid in place of ordinary remuneration, with the sole purpose of avoiding income tax and National Insurance contributions. In reality these loans were never repaid. When taking into account the loan they received, loan scheme users have on average twice as much income as the average UK taxpayer.

The Government estimates that up to 50,000 individuals will be affected by the 2019 loan charge. HMRC has published a breakdown of individuals affected by industry. HMRC data indicates that fewer than 3% of those affected work in medical services (doctors and nurses) and teaching. No estimate of the number of individuals affected within the public sector overall is available. Further information can be found at the following link: https://www.gov.uk/government/publications/loan-schemes-and-the-loan-charge-an-overview/tax-avoidance-loan-schemes-and-the-loan-charge#who-affected

HMRC has 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.

Answered by

Treasury
Named day
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