The IPSE has welcomed the review into the loan charge by Sir Amyas Morse, but issues a stark warning over the IR35 endorsement.
Although the IPSE would have preferred to have seen the loan charge scrapped, it’s happy that Sir Amyas has accepted most of its recommendations, which have in turn been accepted by the government.
Loans that were taken out before December 2010 will be exempted from the review, which is estimated to affect approximately 15,000 people. The government has also said that loans that were taken out between 2010 and 2016 and declared will be exempted. It is estimated this will affect approximately 1,000 people.
Those still affected by the loan charge will have the option to spread repayments over three years – the IPSE says that this will not only mitigate the abruptness of the repayments; it will also mean that an estimated 21,000 people will not be paying tax at an artificially higher rate.
Chris Bryce, CEO of IPSE said, “There are positives here for many of those affected by the loan charge. From the start, the loan charge has been a catastrophe for thousands of hard-working contractors who were wrongly told these schemes were legitimate and legal.
“Sir Amyas Morse’s report takes on most of IPSE’s recommendations to mitigate the damage done by the loan charge – most importantly, by exempting loans before 2010 and declared loans between 2010 and 2016.
“It is also excellent news that the government has said that contractors can opt to spread repayments over three years. This will mitigate the shock of enormous payments and actually reduce the cost for many contractors.
“Positive as many of these announcements are, however, they cannot entirely reverse the damage of the loan charge. This ill-conceived policy did untold damage to thousands of lives across the country. Never again must the government launch retrospective, life-changing tax grabs of this kind.”
Bryce added, “There is also an extremely disappointing endorsement of the changes to IR35 in the report. These changes will drive a whole new tranche of contractors back into the arms of the same snake-oil salesman who peddled these disguised remuneration schemes in the first place. IPSE explained this to Sir Amyas in person and in our written submission. That this report not only ignored this danger, but indeed actively supports the IR35 proposals is a major disappointment.”
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