Disguised remuneration and the self-employed

Produced in partnership with Karen Cooper of Cooper Cavendish

The following Tax practice note Produced in partnership with Karen Cooper of Cooper Cavendish provides comprehensive and up to date legal information covering:

Disguised remuneration and the self-employed
Charge on ‘relevant benefit’
Condition A
Condition B
Condition C
Condition D
Condition E
Meaning of ‘relevant benefit’
Meaning of ‘tax advantage’
Taxation of the relevant benefit

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Anti-avoidance
Double taxation
Outstanding loan charge
Accelerated payments
Postponement of the loan charge for approved fixed term loans (historical)
Loans and quasi-loans made in currencies other than sterling and depreciating currencies
Deductions and anti-avoidance
Disguised remuneration settlement opportunity

Coronavirus (COVID-19): in light of the coronavirus crisis, the government has announced temporary measures to support the self-employed. For more detail, see Practice Note: Coronavirus (COVID-19)—tax implications—Self-employed income support scheme (SEISS). HMRC has confirmed that, where a claim is to be made through the SEISS and the individual in question had loans impacted by the loan charge and is intending to declare a loan charge or settle disguised remuneration scheme involvement with HMRC by 30 September 2020, the SEISS grant will be based on either (a) the average of the tax years 2016–17 and 2017–18 or (b) solely tax year 2017–18 if the individual was not self-employed in tax year 2016–17. The self-assessment tax return for the tax year 2018–19 does not have to be submitted by 23 April 2020; it should be filed by 30 September 2020 (in accordance with the extension provided as part of the government’s response to the Morse review of the loan charge, for more detail, see Practice Note: Disguised remuneration—the loan charge).

In 2011, anti-avoidance legislation in the form of Part 7A of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) was introduced to tackle arrangements aimed at providing employees and their family members with benefits free of income tax and National Insurance contributions (NICs). The rules, known as the ‘disguised remuneration’ rules, typically catch the use

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