Freelance contractors facing life-changing tax bills

Writing for the StandardRussell Lynch says freelance contractors are about to be hit with a “tax time-bomb”.

In April next year, an estimated 100,000 freelance contractors who have used schemes such as Employee Benefit Trusts, Employer Financed Retirement Benefit Schemes, Contractor Loan Schemes and others will be subject to HM Revenue & Custom’s (HMRC) Loan Charge.

Freelancers, many of whom claim they were mis-sold “compliant” schemes, are legally obliged to declare all their previous loans, or face even higher penalties.

According to estimates from Loan Charge Action Group even a contractor on a modest £30,000 salary with five years in a remuneration scheme could face a bill of more than £40,000.

In an update issued last November, HMRC said it expects to reel in £1.2 billion in repayments alone next year.

If you have any concerns relating to the above, please get in touch with a member of our specialist tax team as soon as possible. We will review your individual situation, advise you on your options and establish the best course of action for you to take. Contact your usual Beavis Morgan Partner.