Category: Wokingham and West Berkshire Issues

Following representations by many MPs including myself on behalf of constituents, the government has announced a further review of the loan charge.

I am reproducing today the letter I have been sent with all the details. As you will see the Treasury say the approach they have adopted towards the loan charge still stays in place, but there are arrangements concerning the Review and concerning payment of tax owing which constituents affected by this charge may like to use.

Dear John

DISGUISED REMUNERATION LOAN CHARGE REVIEW

I am writing to give you an immediate update on the Loan Charge review announced today.

As you will know, the Loan Charge was announced at Budget 2016 and passed into law in Finance Act (No. 2) 2017. It is designed to tackle contrived tax avoidance schemes where a person’s income is received as a loan and not repaid.

The Government is clear that such schemes do not work, that wages paid in this way have always been taxable, and that the underlying tax avoidance behaviour is unfair to the 99.8 per cent of taxpayers who did not use these schemes. The Loan Charge was introduced following 20 years of action by HM Revenue & Customs (HMRC) and the Government against these schemes.

There has been a significant amount of misinformation in relation to the Loan Charge, which has caused confusion and anxiety among those affected. However, those affected by the charge have also raised concerns which you will have heard and which the Government has sought to address.

In particular, I wrote to all colleagues on 18 July 2019 to provide an update on new measures to address concerns about the Loan Charge. These measures reflected extensive discussions with professional bodies, independent experts, the official Opposition and colleagues across the House, including members of the Loan Charge All-Party Parliamentary Group. They included confirmation that HMRC will exercise additional flexibility for individuals settling under the published terms who are in genuine hardship.

In addition, HMRC has confirmed that they will not force anyone to sell their main home to pay their debts, and that there is no maximum period over which payment can be made. They also announced simplified payment arrangements for those settling under the published terms. Those settling with income below £50,000 who are no longer involved in tax avoidance may have up to 5 years to pay without providing detailed supporting information, with up to 7 years for those with income below £30,000.

Independent Review of the Loan Charge

Nonetheless, the Government recognises that concerns persist about the Loan Charge.

The Chancellor of the Exchequer has therefore commissioned an independent review to consider the impact of the Loan Charge, focusing on individuals who entered directly into these schemes.

I am delighted that Sir Amyas Morse has agreed to undertake this independent review. As the Comptroller and Auditor General and Chief Executive of the National Audit Office between 2009 and 2019, Sir Amyas is highly respected across the House, and thus well suited to scrutinise this important subject fairly and independently.

The Review will report and provide recommendations to the Chancellor and me by mid-November 2019 so that any individuals affected can have certainty about their next steps in advance of the current 31 January 2020 deadline for individuals to file a 2018-19 Self Assessment return and pay the Loan Charge.

Sir Amyas will specifically consider:

• Whether the Loan Charge, as it applies to individuals who have directly entered into disguised remuneration schemes, is an appropriate response to the tax avoidance behaviour in question; and

• Whether changes announced by the Government in advance of, and since, the Loan Charge came into effect address any legitimate concerns that have been raised about the impact on individuals, including affordability for those affected.

In considering its recommendations, the Review will take into account the impact on wider taxpayer fairness and HMRC’s ability to tackle tax avoidance effectively in the future.

The full terms of reference are available at www.gov.uk/government/publications/disguised-remuneration-independent-loan-charge-review.

Your constituents and the Independent Review period

I would be grateful if you could make clear to any constituents raising the subject that, while the Review is under way, the Loan Charge remains in force in line with current legislation.

Individuals should continue to prepare to file a 2018-19 Self Assessment return and pay the Loan Charge by 31 January 2020. However, we do not know what Sir Amyas will recommend and I recognise that naturally some individuals may have concerns about forthcoming deadlines ahead of the Review’s conclusion.

As a result, I can confirm that I have agreed with HMRC that those in the process of settling will be able to pause and wait for the outcome of the Review before deciding whether to proceed. However, individuals who are subject to the Loan Charge but who have not yet settled should still submit an information return to HMRC setting out their loan balance by 30 September 2019.

HMRC have published guidance, which is also available at www.gov.uk/government/publications/disguised-remuneration-independent-loan-charge-review.

Further details on the review will be available shortly.

Jesse Norman MP

I met with concerned driver instructors over the planned closure of the Reading test Centre. The Licensing Agency has said it is seeking an alternative site, as they seem to agree with local opinion that we do need an accessible driver testing centre in our area.  Reading is a central location for Wokingham and the villages in most of  my constituency. There could be an acceptable alternative, but so far the Agency has not shared with us its thoughts on where that might be. Clearly any new location should also take into account local opinion about the suitability of the chosen  site.

I dropped in to our local CAB in  Wokingham to thank the volunteers and to see what are the latest issues and worries.

They told me that debt and Council Tax remain lead issues. They asked me to pursue with the Council what more can be done to help with  managing Council Tax debt. I welcome the introduction of help sessions by the CAB with a representative of the Council tax collection department of Wokingham Council to assist people who are finding it difficult to meet the bill. Details of these are on the CAB website.

They also alerted me to the growing numbers of cases about family break up which are also reaching them. They can sometimes help with providing more information for people on how divorce proceeds, what might happen over care for the children and other important matters.

I met with opponents of the Bridge farm quarry today. I confirmed that I am against a quarry in that location, for the reasons set out in the Council’s decision on the application. I will be happy to assist the Council in anyway should this matter go to appeal. I will take up with the Council the issue of which sites are identified in their new Minerals Plan to make sure they do not intend to identify this location.

I am pleased to report that Wokingham Council considered carefully the planning application at bridge Farm and refused permission. Like you I am pleased that they came to this conclusion.

Should the decision be appealed I will support the Council as I promised before the decision.

John Redwood (Wokingham) (Con): Wokingham and West Berkshire Councils need money for social care and schools. The current funding is not adequate. I am grateful to the Chancellor. This is very welcome. Does he agree that, at a time of world slowdown, led by a manufacturing recession in several leading countries, a boost to the economy is much needed here and that this is part of that boost?

The Chancellor of the Exchequer (Sajid Javid): My right hon. Friend speaks with great experience. I very much agree that one of the outcomes of today’s spending round will be a further confidence boost to our economy.

I attended the Chancellor’s statement today in spending plans for 2020-21, As I had hoped and expected he announced a minimum of £5000 per secondary school pupil for next year, and £3750 for primary pupils, the latter to rise to £4000 the following year. This will be helpful to Wokingham and West Berkshire schools which have been underfunded.

He also announced an extra £1.5bn for Councils for social care. Again West Berkshire and Wokingham have been at the low end of money for these important services, and should benefit from this increase.

He also provided for the 20,000 extra police officers to be introduced , starting this year.

I am glad my campaign, along with that of like minded MPs with similar problems, has produced more and better results this year.

The Prime Minister has announced that we are boosting schools with a record £14 billion, levelling up per pupil funding across the country so every child in Wokingham & West Berkshire has a world class education. The money is over the next three years.

The cash boost will mean that every secondary school in Wokingham & West Berkshire will receive a minimum of £5,000 per pupil next year and every primary school will get a minimum of £4,000 per pupil from 2021-22, rising at least in line with inflation.

The cash boost will mean £700 million extra for children with Special Educational Needs and Disabilities (SEND), so every pupil in Wokingham & West Berkshire can access the education that is right for them, and none are held back from reaching their potential.

In addition, the new funding will mean £400 million additional funding for further education and sixth form colleges in England including Wokingham & West Berkshire to train and teach our young people the skills they need for well-paid jobs in the modern economy.

The Prime Minister has also pledged to meet the £4.5 billion requirement for teachers’ pensions from outside the education budget. This means that every penny of the extra £14 billion will go straight to schools and delivering the best educational outcomes for our children.

Commenting, The Prime Minister Boris Johnson said:

“When I became Prime Minster at the start of the summer, I promised to make sure every child receives a superb education – regardless of which school they attend, or where they grew up.

“Today I can announce the first step in delivering on that pledge – funding per pupil in primary and secondary schools will increase, and be levelled up across the entire country.

“We should not accept the idea that there can be “winners or losers” when it comes to our children’s futures. That’s why we are providing additional funding now and for the future for every school, with those historically underfunded receiving the greatest increase.

“My government will ensure all young people get the best possible start in life. That means the right funding, but also giving schools the powers they need to deal with bad behaviour and bullying so pupils continue to learn effectively”.

Congratulations and well done to the students across Wokingham Borough for achieving outstanding GCSE results, well above the national average.  A special thank you to teachers, staff and parents who have all played a part in this excellent achievement.