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CWG2 update on income made available through third parties

on Friday, 04 May 2018.

CWG2 update on income made available through third parties

HMRC has updated section 5.15.7 Employment income provided through third parties about the 2019 loan charge in its CWG2 guidance.

The section on income provided through third parties covers the rules on employment income, which:

  • involve third parties (including trusts or other vehicles used to reward employees)
  • attempt to avoid or delay payment of Income Tax.

These rules are sometimes called the ‘disguised remuneration’ rules or the ‘Part 7A’ rules (which refers to the part of ITEPA 2003 where most of the law is located).

Broadly speaking, if third party arrangements are used to make available what’s in substance a reward or recognition, or a loan, in connection with the employee’s current, former, or future employment, then an Income Tax charge arises.

The latest change relates specifically to the 2019 loan charge and highlights that an Income Tax charge will arise at the end of 5 April 2019 on the value of any outstanding loans made in the past to employees via third parties to which part 7A would have applied.

For more information about Part 7A income, read Employment Income Manual, EIM45000 onwards.