LITRG encourages eligible loan charge taxpayers to consider new HMRC settlement offers
The Low Incomes Tax Reform Group (LITRG) of the Chartered Institute of Taxation, is encouraging workers who are eligible for HMRC’s new loan charge settlement terms to review any offer carefully and consider engaging with HMRC. For many eligible people, the amount due under the new settlement terms may be significantly reduced, or depending on their circumstances, may be nil, meaning they have nothing to pay1.
The charity’s intervention comes as HMRC begins issuing offers to eligible individuals under the new terms.
LITRG recognise that some people may remain reluctant to engage, including where the proposed settlement amount is negligible or nil. Some may find the process or paperwork confusing or intimidating. Others may have continuing concerns about the fairness of the loan charge and new settlement terms, or unresolved matters relating to the underlying loans that complicate their decision on whether to accept an offer.
However, LITRG is keen to ensure that people who could benefit from settlement are not put off from considering the opportunity to resolve their loan charge tax position and are aware of the support available from HMRC.
Meredith McCammond, Technical Officer at LITRG, said:
“We understand that some groups are excluded from this opportunity and we have raised questions over the fairness and wider impact of that decision2. However, for those who are eligible, despite it not being the wholesale review some may have wished for, there is still considerable scope for good and we believe this settlement opportunity offers a genuine route to resolution for many workers.
“Resolving cases where the position is relatively straightforward can help bring certainty for those taxpayers but could also help reduce the overall number of outstanding cases, allowing more attention to be given to cases where the position is more complex or requires further consideration.
“We are encouraging eligible workers who receive an offer to consider it very carefully, and if they have questions, to contact HMRC promptly. Any settlement contract becomes binding only when it is signed, so asking questions or discussing the offer does not in itself commit someone to accepting it.
“We appreciate that the paperwork may be off-putting and that signing a formal agreement may feel daunting. HMRC must follow a legal process, so some documentation will be unavoidable, even where the offer is nil. However, each person sent an offer should have a named HMRC caseworker who can explain the process and answer questions. We expect HMRC to communicate clearly, respond constructively to individual circumstances and make the operational process as straightforward as possible in line with the HMRC Charter.”
Loan recall activity
LITRG is warning that potential inheritance tax (IHT) complications may prevent people from having complete certainty about their ultimate position, adding another layer of confusion for those receiving settlement offers3.
Some people whose arrangements involved loans from trusts may continue to incur IHT charges until the loan is written off or the trust ends. Under the new terms, any settlement-related IHT arising within three months of accepting an offer will be waived. This window may leave affected taxpayers vulnerable to approaches from organisations claiming to own their loans.
These organisations may seek a payment to write off or ‘release’ the loan or even claim that the full amount remains payable.
Meredith McCammond continued:
“This loan recall activity related to the underlying loans, which we have seen before, is separate from the loan charge settlement scheme process. HMRC says it does not have statutory power to resolve disputes between private parties. Whether a loan must be repaid is therefore generally a matter between the individual and the organisation claiming to own it.
“We understand that these demands can be stressful and confusing, but a growing range of information and resources is available to help people understand who is behind the activity, the basis on which the demands appear to be being made and how they can protect their position. This includes our own guidance but also some helpful information from HMRC.4
“It is important that people do not feel pressured into making decisions about their loans without first researching the position thoroughly and understanding their options.”
Notes for editors
- Estimates are that most individuals could see reductions of at least 50%, with around 30% having their liability reduced to zero. We understand that HMRC will release figures about customers who have received and accepted settlement offers under the new Loan Charge Settlement Scheme in the coming months.
- See our Finance Bill 2025-26 briefing: Loan charge settlement scheme
- The inheritance tax position is set out in this GOV.UK guidance.
- HMRC has updated its ‘Repaying a Disguised Remuneration Loan to a Third Party’ guidance. Previously they have stated that a deed of release is not needed as evidence of loans being written off or released.
- More information about the new settlement opportunity can be found in HMRC’s new YouTube video here. HMRC’s guidance on the new settlement opportunity is on GOV.UK.
- LITRG’s guidance on the loan charge, including loan recall, can be found on their website.
