This year we had some good news for next year, the exemption threshold for employment-related loans has been increased for 2014/15 from £5,000 to £10,000, as long as the balance is below this level there is no tax charge for employees or employers.

But there could be bad news for participators (Directors/Shareholders) who have been using one of these techniques to avoid the 25% temporary Corporation Tax charge:

1. Using a Partnership or LLP where the company is a partner or member as a way to get loans

2. Making arrangements that did not qualify as loans but the where value ended up in the hands on a participator

3. Making loans repaying them within 9 months and getting a new loan, the Bed and Breakfast approach

4. Transfers of assets

5. Loans channelled through third parties

New anti avoidance rules are coming, there is a consultation paper aimed at minimising the scope for abuse and there will be new legislation in the Finance Bill 2014 and Finance Bill 2015.

Be warned!

steve@bicknells.net