Important things to note for those facing loan charges

If you have clients who are facing loan charges, here are a few important steps to note

Deadline of the tax return

The deadline to pay the tax return and loan charges without penalty is set 30th September 2020. This also includes any other tax that is due. It is also for the people with loan charge issues who are not paying the charge or settling for it.

This involves all sorts of tax.

form of additional information

The tax payers who are facing a loan charge should make sure they complete the additional information form. The new version of this form will be available by April 2020 as it is being updated right now. The deadline for submission of this form is also 30th September 2020. This additional information form is needed if the tax payers want to make election to spread the loan charge. The tax payers

spreading provisions

Tax payers have the choice to make an irrevocable election in order to their loan income over a course of three years which is remaining. This can be done once the tax payers. Rather than having the loan (which is outstanding) treated as income, tax payers can divided in into three parts. This would help the tax payers save money as well as this may help them avoid paying higher rates of tax, triggering the HICBC, losing their personal allowance.

Time to pay

There are different payment plans for the different categories of tax payers. The tax payers who do not earn more than 50,000 euros are automatically entitled to pay the loan in a time period of 5 years. Those who do not earn more than 30,000 euros are automatically entitled to pay in a period of 7 years.

Double taxation

HMRC can continue with any open enquiry or assessment of earlier years even if the tax payers have paid the loan charge. Double taxation is not allowed. Tax payers would have to pay the difference if the amount agreed or assessed is higher than the loan charge.