Finance Bill 2025-26 briefing: Loan charge settlement scheme
LITRG has produced a Finance Bill 2025-26 briefing on the proposed introduction of a new loan charge settlement opportunity.
Clause 25 of the Finance (No. 2) Bill introduces a new HMRC loan charge settlement opportunity following the publication of the independent review by Ray McCann.
Subject to some questions and clarifications we are seeking from HMRC about the practicalities of how they intend to operate the scheme, LITRG welcomes the scheme as a positive step towards resolving many outstanding loan charge cases by reducing barriers such as interest, penalties, and offering a £5,000 discount—particularly beneficial for lower‑income taxpayers.
However, LITRG are concerned that the scheme excludes key groups: individuals who have already settled and fully paid their liabilities, and those with loans outside the technical loan charge years (pre‑2010 and post‑2019), despite similar factual circumstances to in‑scope cases.
Excluding those who have already settled and fully paid their liabilities risks placing compliant taxpayers in a worse position than those who delayed settlement, potentially harming trust and future compliance.
Individuals with pre‑2010 loans are excluded due to the earlier Morse Review, yet may face sizeable liabilities. Because access to the new settlement opportunity generally requires settling all liabilities, these individuals may be far less likely to be willing or able to settle, undermining the aim of resolving cases.
Those with post‑2019 loans—many of whom are lower‑paid agency workers—have fallen into a gap between the loan charge and HMRC’s planned joint‑and‑several liability measures for umbrella company supply chains. While HMRC now seems to accept that disguised remuneration can be driven by umbrella companies avoiding PAYE rather than by individuals seeking to avoid tax, current policy still leaves these workers stranded between two regimes with no clear route to resolution.
LITRG recommends amending the statutory definition of “loan charge amount” to allow already‑paid amounts to be reconsidered under the new terms, and widening HMRC’s interpretative scope so that related disguised remuneration cases outside the 2010–2019 period can be included. This would help address the unfairness and provide meaningful resolution routes for all affected taxpayers.