Is the new 2019 loan change immoral and unfair? Well, according to MP Stephen Lloyd, it’s exactly that! He stated that in fact, thousands of independent workers “could be made bankrupt because of the retrospective tax measures.”

But, what is the 2019 loan change?

Well, with IR35 introduced to tackle ‘disguised employment’, there was a whole bunch of loopholes. Which, in turn, gave birth to a whole host of new employment umbrella arrangements. Typically, this was workers being paid through loans. In doing this, they were promised to be protected from IR35. These were all claimed to be legit and approved by authorities and consequently, many workers took the advice and went down this umbrella route.

But, now, the government are cracking down. Instead, they are claiming that these arrangements were “not what Parliament intended”, and consequently, were invalid.

So, if you have any outstanding loans from arrangements, then you could be hit with a fine come April 2019. This is for things such as Employee Benefit Trusts, etc, which will be seen as taxable remuneration. That is unless you settle things with HMRC or pay off the loan.

Under this charge, the loan is basically classed as taxable income. And, this charge can be triggered from loans up to 20 years old. The specific sum of the charge though will depend on each case. However, it can include things such as National Insurance contributions and income tax (at a percentage of the balance).

Stephen Lloyd Mp stated that “this is despite years and years – almost 20 years – of tax returns being filed, dues paid and HMRC not flagging that anything illegal was taking place.”

“Instead, HMRC has suddenly opted for a ‘quick-fix’ by coming up with a law which will enable them to place a charge on all ‘loans’ going back as far as 1999.”

“Hard-working contractors are now being hounded by HMRC with Advanced Payment Notices (APNs) without any right of independent appeal.”

“People who acted in good faith are being punished for the Government’s own imprecise legislation, which enabled agencies and tax advisers to take advantage of loopholes and flourish off the backs of honest contractors.”

“I have been contacted by many people from across the country affected by this change of Government policy, frightened that they are going to lose their homes and livelihoods.”

‘Many face six-figure tax bills and charges on outstanding ‘loans’.”

“Going after the freelancers, rather than those who advised them, is in my view wrong of HMRC.”

“Some firms still offer employees similar arrangements today, yet the Government and HMRC are doing nothing to stop them.”

For more info and to take a look at Stephen Lloyd MP’s full discussion on the matter, click here.

Or, take a look at some of our top money saving tips for tradespeople here.

So what do you think of this? Could you be impacted by this loan change? Let us know in the comments below.


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