Freelancers and contractors face the new Loan Tax
If you’re a freelancer or consultant – are you ready for the new Loan Charge?
Chancellor Philip Hammond announced this new tax in 2017 and it has now come into focus again with the Autumn budget around the corner. The Loan Charge applies to freelancers and contractors who may have used so-called ‘disguised remuneration schemes’ to reduce their income tax liabilities. As a result, the new rules – which are being applied retrospectively – mean that many unsuspecting self-employed people will be receiving an APN tax payment demand on their doormats in the coming days.
For many workers, this will mean receiving a completely unexpected bill, and many contractors and freelancers simply won’t have the funds to hand to meet a tax demand. The tax bill will have full details of what is owed, which may well include years of unpaid PAYE, VAT and National Insurance (NI) contributions – and with interest applied.
Whatever your ethical stance today on tax avoidance schemes, the fact is that many contractors pursued employment setups that were perfectly legal and recommended by accountants at the time. Most of them are happy to pay what is due, but receiving a short-notice demand for large sums of money – and for an unexpected and new tax – can be extremely stressful.
Vast bills for some
Some of these bills are expected to date to over 15 years ago, and with interest applied, the figures are likely to be large. Thousands of contractors and freelancers who have already sought to agree settlement figures have been utterly shocked at the huge figures that HMRC has charged. Plus, they’ve noticed the loans that they took out originally as part of disguised remuneration schemes will now be taxable under inheritance tax rules. Some contractors could face bills as large as £250,000 or even more.
Will a payment plan cover it?
HMRC is offering payment plans to some freelancers affected by the scheme, but individuals must earn under £50k before tax in the current financial year to be eligible. Even then, the repayment figures are likely to be unrealistic and extremely stressful to anyone affected by this new liability.
Avoiding the stress
Avoid the worry of how you will meet an APN from the taxman. Contact Wiseman Finance Limited today to find out more. We are a specialist finance brokerage based in Horsham with an expertise in raising finance for any unexpected tax bills. Whether you need finance to cover your VAT bill, your tax bill or for another business reason, we are here to assist quickly and with ready, affordable finance.
We work with a tried and trusted panel of lenders, many of whom are not accessible directly and who only work through selected speciality brokers. These lenders are ready to lend to contractors and freelancers for a variety of business purposes, including VAT bill loans and tax bill loans. We carry out all the hard work by establishing your unique needs and then using your loan requirements to find the right lenders and to arrange the loan for you.
Contact us today
Contact us to discuss your needs confidentially and without obligation. Our friendly team are on hand to assist with expert advice and access to the finance you need – fast.