Policy paper

HMRC operational activity during the new independent review of the Loan Charge

Updated 26 November 2025

Introduction 

The loan charge was announced at Budget 2016 and legislated by Parliament in 2017. The intention of the loan charge was to tackle the historical use of contrived tax avoidance schemes that sought to avoid income tax and National Insurance by disguising income as allegedly non-taxable loans. It was an extraordinary piece of legislation that has been subject to significant debate and controversy.

We acknowledge it did not fully meet its original objectives to encourage individuals who had entered into loan schemes to settle their liabilities before they needed to pay the loan charge. There are currently around 37,000 customers with outstanding tax liabilities ranging from small amounts to some over £5 million.   

At Budget 2024, the government committed to a new independent review of the loan charge, which was carried out by Ray McCann, a former President of the Chartered Institute of Taxation. The scope and objectives of the review were set out in the published terms of reference. The overarching objectives of the review were: 

• bringing the matter to a close for those affected;
• ensuring fairness for all taxpayers
• ensuring that appropriate support is in place for those subject to the loan charge.

The terms of reference for the review were published by the government explaining what the review would consider. The review, independent of government and HMRC, commenced on 23 January 2025 and was led by the reviewer and his team. 

The review has now concluded, and the government has now published its response at Budget 2025.  

In the first half of 2025, HMRC sent letters and a question and answer document to customers to explain its operational approach during the review. Copies of the letter text sent to customers have been published on GOV.UK.  

Based on the information HMRC held about customers, the letters explained whether HMRC thought the disguised remuneration arrangements they used would be considered by the review or not and what HMRC’s operational approach to customers would be in their case during the review.   

HMRC will now review your arrangements. Your named HMRC contact will write to you in early 2026, explaining if and how your position is affected by the outcome of the review  

If your arrangements are covered by the recommendations of the review accepted by the government, then you should receive an invitation to settle at a reduced amount. 

While you wait for us to review your arrangements 

If you received a letter from HMRC in early 2025 which set out that we believed some or all of the disguised remuneration arrangements you used would be considered by the review, you can let us know that you are interested in settling your tax position under the new terms by getting in touch with your named contact and providing the information below.

You can still let us know you want to settle without giving us the information, but it will help us understand your position more quickly if you can send us the following: 

• names of the disguised remuneration arrangements you used – if you know them 
• tax years in which you used a disguised remuneration arrangements 
• disguised remuneration amounts you received in each tax year – if you would like advice on how to find this, please get in touch with your named contact 

Important

If you have any other questions about your tax affairs and the Autumn Budget 2025 announcement or want to give us information that will help us to start your settlement process, then please contact your named HMRC contact.

For other general disguised remuneration enquiries, customers can continue to contact HMRC on 0300 322 9420.

The HMRC helpline won’t be able to tell you how you may be affected by the review outcomes over the phone.

Settlement opportunity 

The new settlement opportunity is open to anyone with outstanding loan charge liabilities, including employers. 

For customers that decide to settle, the key features of the new settlement opportunity are that: 

• instead of being charged at the tax rates that apply to the loan charge and all other income in 2019, the new offer will be worked out based on the tax rates they would have paid in the years that loans were made
• the new amount will be reduced to account for historic promoter fees - up to a maximum discount of £10,000 per year that a customer used a loan scheme.
• for every customer, the new amount will be further reduced by £5,000, reducing the amount that many people could pay to zero
• no late payment interest will be charged – reducing the amount that many customers could pay by around 20%
• any inheritance tax already due because of the use of loan schemes covered by the settlement will be written off
• where a customer is unable to pay the new amount in full immediately, HMRC will agree a payment arrangement tailored to their ability to pay. Any customer can decide to pay the new liability over five years, without having to discuss affordability with HMRC. Forward interest will apply as normal if a customer decides to pay via instalments 
• the maximum reduction for any one customer will be no greater than £70,000 on what the customer already owed because of the loan charge  
• promoters of tax avoidance schemes will not be able to access the new settlement opportunity  

Independent advice 

If you have a tax adviser, you may want to talk to them about the government response and the letter we will send you about it.

For customers who do not have a tax adviser, free advice is available from organisations such as TaxAid and Citizens Advice. 

TaxAid can give tax advice to people on low incomes. For example, they can help check that a tax bill is right and deal directly with us, if needed. 

Citizens Advice can help people work out ways to pay the tax they owe. 

Customers who need extra support 

Dealing with tax, financial hardship, or debt can lead to pressure on people, especially those in vulnerable circumstances. HMRC encourages anyone affected to talk to them. It has guidance and training in place for all named contacts and customer advisers on identifying customers who need extra support, and providing reasonable adjustments to meet their needs.

Where appropriate, HMRC will signpost customers to voluntary and community organisations and, where needed, to a dedicated Samaritans helpline for specialist emotional help, where customers can talk through their concerns and worries.

HMRC will be writing to customers in early 2026, explaining if and how their position is affected by the outcome of the review. If a customer needs to speak to HMRC before then, including those customers in vulnerable circumstances, they should contact their named contact, or, if they do not have their details, HMRC on 0300 322 9420.

For customers who are having a difficult time and think it would help to speak to someone, they can access NHS support by calling 111, or use free listening services including Samaritans, Mind and Shout. Friends and family who are concerned about someone’s wellbeing can also access these services for advice.