New loan charge settlement scheme offers incentives not previously available
New loan charge settlement scheme offers incentives not previously available
Commenting on the Government’s new Loan Charge Settlement Scheme, Richard Philson, a tax dispute resolution director at BDO said:
“The Loan Charge was first introduced in 2017. The Government and HMRC wanted to tackle historical use of what was viewed as ‘contrived tax avoidance schemes’ that sought to avoid charges of income tax and National Insurance by disguising remuneration as a form a non-taxable payment, typically a loan.
“The new 2026 Loan Charge Settlement Scheme, which is now open, provides for deductions and incentives which have not been available in previous settlement terms. “The newly released terms also provide for inheritance tax due because of the use of loan schemes to be written off, a further benefit which could, in some cases, be quite significant. This requires the underlying arrangement (for example a trust) to be closed down. This will be separate from the settlement with HMRC – but is important not to be overlooked.
“Those affected, or those who think they may be affected, can either wait until HMRC contacts them, or they can approach their adviser to help in liaising with HMRC to reach a settlement.
“At this stage, we don’t know when HMRC will write to those affected but with tens of thousands of taxpayers in scope, this may take some time.
“The Government will be hoping that everyone with outstanding loan charge liabilities will take advantage of the new settlement opportunity in order to bring this long running issue to a close. Most cases, regardless of the money involved, are horribly complex and do require specialist tax advice based on the specific facts and circumstances of the arrangement.”
This latest announcement follows the second review of the loan charge legislation undertaken by Ray McCann in 2025. This estimated that approximately 32,000 taxpayers remained impacted by the loan charge and were yet to reach a settlement with HMRC to agree their tax affairs. The first review was carried out by Sir Amyas Morse in 2019.
ENDS
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