Global Daily Tax News, UK To Offer Loan Charge Settlement Scheme, (Dec 3, 2025)

The UK Government has confirmed that legislative provisions will be included in the Finance Bill 2025-26 to resolve ongoing disputes regarding taxpayers' liability to the loan charge.

The intention of the loan charge was to tackle the historical use ...

The UK Government has confirmed that legislative provisions will be included in the Finance Bill 2025-26 to resolve ongoing disputes regarding taxpayers' liability to the loan charge.

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.

The Bill will implement the Government's response to an independent review, commissioned in January 2025, intended to resolve long-running controversy and disputes regarding liability to the loan charge, including most notably by offering a new settlement opportunity for those liable to the charge.

The Government has said the new settlement opportunity will be open to anyone with outstanding loan charge liabilities, including employers.

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 taxpayers 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 GBP10,000 per year that a customer used a loan scheme;
for every customer, the new amount will be further reduced by GBP5,000, 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 percent;
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. Taxpayers will be automatically eligible to settle the debt over five years, without having to discuss affordability with HMRC, with forward interest applying as normal if a customer decides to pay via instalments;
the maximum reduction for any one taxpayer will be no greater than GBP70,000 on what the customer already owed because of the loan charge; and
promoters of tax avoidance schemes will not be able to access the new settlement opportunity.

Global Daily Tax News, UK To Offer Loan Charge Settlement Scheme, (Dec 3, 2025)

The UK Government has confirmed that legislative provisions will be included in the Finance Bill 2025-26 to resolve ongoing disputes regarding taxpayers' liability to the loan charge.

The intention of the loan charge was to tackle the historical use ...

The UK Government has confirmed that legislative provisions will be included in the Finance Bill 2025-26 to resolve ongoing disputes regarding taxpayers' liability to the loan charge.

The Government has said the new settlement opportunity will be open to anyone with outstanding loan charge liabilities, including employers.

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 taxpayers 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 GBP10,000 per year that a customer used a loan scheme;
for every customer, the new amount will be further reduced by GBP5,000, 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 percent;
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. Taxpayers will be automatically eligible to settle the debt over five years, without having to discuss affordability with HMRC, with forward interest applying as normal if a customer decides to pay via instalments;
the maximum reduction for any one taxpayer will be no greater than GBP70,000 on what the customer already owed because of the loan charge; and
promoters of tax avoidance schemes will not be able to access the new settlement opportunity.