Global Daily Tax News, UK Urges Taxpayers To Use Loan Charge Settlement Scheme, (Sep 10, 2026)

HM Revenue and Customs has released guidance for taxpayers on taking advantage of the new Loan Charge Settlement Scheme.

HMRC said the scheme, launched last month, could reduce taxpayers' liabilities by 50 percent and will waive liability for one-third of taxpayers.

HM Revenue and Customs (HMRC) is writing to eligible taxpayers and is asking those who receive a letter from their caseworker to respond as soon as possible. It said: "These arrangements can be complicated and take some time to work through, which is why every customer has a named contact they, or their agent, can speak to."

The agency said bills may be reduced by up to GBP10,000 for each year a taxpayer used an avoidance arrangement. HMRC will also remove late payment interest and apply a GBP5,000 reduction to every taxpayer's bill.

Those not taking advantage of the Scheme may be liable to the full amount.

The agency has launched a new video to explain how to apply and has also released details of the Independent Loan Charge Review, which led to the new Loan Charge Settlement Scheme. Guidance on the scheme is also available on HMRC's website.

Background

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 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 taxpayer, 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.