Disguised Renumeration is a tax avoidance scheme involving paying someone with a "loan" that is never expected to be paid back.
Disguised Renumeration is the process where an individual receives payment in the form of a loan. A loan is not considered income so is not eligible for Income Tax or National Insurance contributions. This loan is never repaid so the individual avoids paying tax on the money they have received.
In 2019, HMRC introduced a Loan Charge that allowed them to recover any unpaid taxes and National Insurance from anyone found to have been involved in Disguised Renumeration. The Loan Charge liabilities fall on the employer if they set up the scheme. However, if the employer no longer exists, the Employee is liable to pay the charge.
Now, the rules have changed so that loans are more restrictive or they count as a Benefit in kind, which is liable for tax.
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