Guidance on loan charge settlement scheme

Thousands of people and employers with outstanding loan charge liabilities are being invited to take advantage of a new loan charge settlement scheme that could reduce their bills by up to £70,000.

The loan charge refers to historical tax-avoidance loan schemes that didn’t pay National Insurance or Income Tax.

Most people could see reductions of at least 50%, with around a third able to settle without paying anything at all.

HMRC is writing to eligible taxpayers, asking anyone who receives a letter from their caseworker to respond as soon as possible.

These arrangements can be complicated and take some time to work through, which is why each taxpayer has a named contact that they, or their agent, can speak to. Taxpayers do not have to wait for a letter. They, or their agent, can contact their named caseworker at any time to discuss the settlement scheme.
 
On 5 August 2026 the ‘Employment and Trading Income etc. (Loan Charge Settlement Scheme) Regulations 2026’ came into force, allowing the more flexible handling of loan charge repayments. New guidance includes information on when settlement offers will be made, how long they will be available and what determines how long taxpayers will have to settle.

It also has examples of how to calculate the settlement offers.

Taxpayers who cannot pay in full straight away can agree a payment arrangement based on what they can afford and those who settle under the new terms can choose to pay over five years.

Anyone who does not settle will have to pay the full amount of the loan charge.

If you need help in dealing with any outstanding loan charge liabilities, please contact us. We’d be happy to help you.

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