Don’t get caught up in the crackdown

Don’t get caught up in the crackdown

Loan schemes have been a popular feature of the contractor market for years. Used to pay contractors, most loan schemes are paid in the form of an interest fee loan that is never expected to be repaid.

Being paid this way has meant that many contractors have been able to increase their take home pay by avoiding paying income tax and national insurance – but a new HMRC crack down on loan schemes and tax avoidance means many contractors who have benefitted from the scheme are facing life altering tax bills.

Under new legislation HMRC is entitled to demand unpaid taxes and National Insurance contributions on any part of a loan that has not been repaid on 5 April 2019… and going back as far as April 1999!

But what does that mean for you?

Well, according to accountancy expert predictions, a contractor who worked for five years on a salary of £30k a year that was received in the form of a loan now faces a whopping £40,000 bill! Ouch!

Of course, it’s come as a shock to many contractors and while the book should stop with the end user – if they’ve gone out of business or haven’t been properly vetted it’s down to the contractor to pay.

But despite this crack down, many believe this could see the popularity of loan schemes rise once again, meaning it’s more important than ever to be vigilant and ensure that your employer is playing by the rules.

That’s why here at Ashberry Recruitment we have a vetted preferred supplier list. We ensure that our umbrella payroll suppliers are compliant with all HMRC rules meaning you can rest assured that your pay is your pay with no nasty surprise tax bills in the future.

So, if you’re looking for your next job, play it safe and let us help so you can do the job you love without the worry of hidden tax bills years down the line.