Guidance

Disguised remuneration: settling your tax affairs

If you used a disguised remuneration tax avoidance scheme and gave us all the required information by 5 April 2019, you can still settle your tax affairs under the November 2017 terms.

If you gave HMRC all the information we asked for by 5 April 2019, and are in the process of settling, the November 2017 settlement terms will remain available to you. This means you can still agree with us what you owe. If you need to, you can also arrange a payment plan of 5 or 7 years under simplified arrangements, or longer if necessary.

Settling under the November 2017 terms will give you certainty about your disguised remuneration liability and means you:

  • will not have to report and pay the loan charge that came in to effect on 5 April 2019
  • may pay a lower rate of tax on your disguised remuneration loan charge - the loan charge will add all your loans together and tax them in one year
  • do not face extra costs if the scheme you used moves to litigation

If you did not give us the information we needed by 5 April 2019, or do not settle by the date we give in our letter of offer, the November 2017 settlement terms will not be available to you and you’ll have to report and pay the loan charge.

There’s a different process if you want to settle your tax affairs for other types of tax avoidance scheme.

Loan charge review

The loan charge review is now complete, and government has issued its response. Find out what this means to you.

Who can settle their tax affairs under the November 2017 terms

We will work with you to settle your tax affairs so that you do not have to pay the loan charge if you:

  • contacted HMRC to settle your use of a disguised remuneration tax avoidance scheme
  • gave all the information needed by 5 April 2019
  • continue to engage with us
  • reply by any dates we give you

If not, you’ll need to report and pay the loan charge.

Contact HMRC

If you are not already speaking to an HMRC contact, you can send an email to:

If you gave us all the information we needed by 5 April 2019, we will write to offer you a chance to settle under the November 2017 terms. We will explain what steps you need to take.

If you settle by the date we give you, you will not need to report and pay the loan charge.

Paying what you owe under the November 2017 terms

The November 2017 settlement terms are in this guidance and in the detailed guidance for tax agents. The settlement terms are different depending on whether you’re classed by HMRC as:

  • a contractor
  • an employer
  • an employee

Contractors

You’re classed as a contractor if you provide your services to clients that do not directly employ you. You may provide your services through:

  • an umbrella company
  • a partnership
  • an agency
  • your own company

If you’re not sure if this affects you, check if you have used a contractor loan scheme.

You’ll need to pay:

  • Income Tax on the net amount of all disguised remuneration loans or payments made - this will be calculated using the bands and rates in the years the loans or payments were made
  • late payment interest for any years where we have an open enquiry into your tax affairs, or where HMRC are within time limits to open an enquiry, or where an assessment is in place
  • National Insurance contributions, if you’re a self-employed contractor - including through partnerships
  • any penalties and Inheritance Tax, depending on your circumstances

The overall amount may be reduced by any Income Tax you’ve paid because you declared a benefit in kind on the basis of getting a beneficial loan. This is only an option if the relevant tax year is in time to be amended, or for an overpayment relief claim to be made.

Employers

You’re classed as an employer if you entered into a scheme to reward your employees.

You’ll need to pay:

  • Income Tax and National Insurance contributions on the amount contributed to or allocated within the scheme - this will be calculated using the bands and rates in the years you contributed to the scheme or allocations were made
  • late payment interest for any years where we have an open enquiry into your tax affairs - or where we are within time limits to open an enquiry, or where an assessment is in place
  • any penalties and Inheritance Tax, depending on your circumstances and the type of scheme you entered into

The overall amount may be reduced by any National Insurance contributions paid by you or Income Tax paid by your employee, on the basis of getting a beneficial loan and declaring a benefit in kind. This only applies for tax years in time to be amended or for an overpayment relief claim to be made.

You’ll not have to pay Corporation Tax on the fee paid to the promoter for entering into the scheme.

Employees

You’re classed as an employee if you’re not a contractor and you were paid through a disguised remuneration scheme your employer used.

If your employer has not already settled their tax affairs, to settle yours you’ll need to pay:

  • the same amount of Income Tax and National Insurance contributions that your employer would have paid if they were settling your tax affairs
  • late payment interest for any years where we have an open enquiry into your employer - or where we are within time limits to open an enquiry, or where an assessment is in place
  • any penalties and Inheritance Tax, depending on your circumstances and the type of scheme

This amount may be reduced by any Income Tax paid by you, where you declared a benefit in kind on the basis of getting a beneficial loan. This is only an option if the relevant tax year is in time to be amended, or for an overpayment relief claim to be made.

If you have problems paying what you owe under the November 2017 terms

If you think you’ll have difficulty paying what you owe under these terms, we can help you settle your tax affairs and get out of disguised remuneration avoidance schemes by spreading payments over a number of years.

There is no maximum time period for payment arrangements under these terms. If you think you’ll need an extended period to pay what you owe, you should contact HMRC.

HMRC made it easier for those who settle under the November 2017 terms to arrange to pay their settlement in instalments, for those earning less than £30,000 and £50,000. You can pay the amount due over a period of up to 5 or 7 years, without needing to give any detailed financial information, where:

  • for payment arrangements of up to 7 years, your expected current year taxable income is less than £30,000 - for employees, this is your expected gross earnings, for self-employed people, this is your expected net profit
  • for payment arrangements of up to 5 years, your expected current year taxable income is less than £50,000
  • you are no longer engaged in tax avoidance
  • you gave us the information needed to settle your disguised remuneration tax affairs by 5 April 2019
  • you settle by the date given in our letter

If your income is higher or you need a longer period to pay, we can still help you. There are no defined minimum or maximum time periods for payment arrangements but we will need more information.

We will:

  • take into account any changes in your circumstances and discuss options to manage your case in the best way
  • always take a realistic look at your income, assets and essential outgoings, alongside what you owe and any other debts
  • always consider how much you’re able to pay, and over what period
  • expect you to pay the outstanding amount in the fastest possible time

If you think you have no realistic way of paying what you owe, you should discuss this with us when we contact you about your settlement.

Telephone: 03000 534 226 - for contractor loan scheme users.

For all other disguised remuneration scheme users, speak to your usual HMRC contact or email: ca.admin@hmrc.gov.uk.

We will talk with you about your options and work with you to resolve your tax matters in the best way.

If you do not settle and pay what you owe

If you do not settle by the date specified in the letter of offer, the current settlement terms will no longer be available to you. You’ll have to report and pay the loan charge.

Published 7 November 2017
Last updated 20 December 2019 + show all updates
  1. The loan charge review section has been updated.

  2. Welsh translation added.

  3. This page has been updated to reflect the loan charge which is effective on 5 April 2019 and the settlement terms that change from that date.

  4. This page has been updated to reflect the loan charge which is effective on 5 April 2019 and the settlement terms that change from that date.

  5. Guidance has been updated about if you have problems paying what you owe.

  6. Guidance has been updated about how to settle your tax affairs, information you must send to HMRC and if you have problems paying what you owe.

  7. The disguised remuneration settlement terms in section 'If you have problems paying what you owe' have been updated.

  8. Amendments made to the disguised remuneration settlement terms.

  9. First published.