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1Repair Windows errors before they cause bigger problems2Fix the driver behind crashes, sound loss and screen glitches3Clear out junk files and repair common Windows errorsThe UK government has introduced a new settlement opportunity for some people and employers with unpaid Loan Charge liabilities. HMRC’s 2026 guidance sets out a simplified, year-by-year calculation with reductions, but eligibility, the amount due and the response deadline depend on each case and the offer HMRC sends.
What changed after Ray McCann’s review?
At Autumn Budget 2024, the government committed to another independent review of the Loan Charge. On 23 January 2025, Exchequer Secretary to the Treasury James Murray appointed Ray McCann, a former president of the Chartered Institute of Taxation, to examine obstacles to resolving outstanding liabilities and ways to encourage settlement.
The government published the review and its response at Budget 2025 on 26 November 2025. It accepted all but one of the recommendations and committed to a new settlement opportunity. The government also added a £5,000 reduction per individual in some areas beyond the review’s recommendations. HMRC’s implementation guidance, published on 7 September 2026, says the scheme is delivered through sections 25 to 27 of the Finance Act 2026 and The Employment and Trading Income etc. (Loan Charge Settlement Scheme) Regulations 2026. HMRC has begun sending formal offers and is prioritising people who have told it they want to settle.
The Loan Charge was announced at Budget 2016 and enacted through the Finance (No. 2) Act 2017. It concerns certain disguised remuneration arrangements, often involving earnings presented as loans. The review covered in-scope scheme use from 9 December 2010 to 5 April 2019, including outstanding Loan Charge liabilities and related outstanding liabilities on the underlying income. It did not cover tax avoidance outside that scope.
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Who may be eligible for an offer?
The scheme is for individuals or employers with an unpaid disguised remuneration Loan Charge liability. HMRC’s guidance includes Income Tax, National Insurance contributions and relevant late-payment interest arising from the Loan Charge or the earlier receipt of loan income. It also includes certain liabilities within a settlement agreed after 1 June 2021. The scheme is not a general settlement route for every tax-avoidance or disguised-remuneration issue.
HMRC says it will contact people it believes may qualify. It is not required to offer the scheme to people it suspects of promoting or introducing avoidance arrangements. An HMRC offer, rather than scheme descriptions or government estimates, determines whether a particular case has been included.
When an employer and employee are both involved
If an employer was required to operate PAYE and still exists, HMRC says it will try to collect tax and National Insurance from that employer first. It sends an offer to the individual at the same time. While HMRC pursues the employer, the individual’s offer remains open and may be revised to account for amounts the employer pays. HMRC identifies a special process for some sole-director personal service company cases; the general employer process should not be assumed to describe those cases.
How does HMRC calculate the settlement?
The amount is not a flat percentage discount. For an individual, HMRC’s implementation guidance describes a simplified calculation using income by tax year, a promoter-fee reduction, a further £5,000 reduction and a cap. The calculation is distinct from the full amount that could otherwise be due under normal rules.
- Work out gross arrangement income for each tax year. HMRC includes untaxed loans, other income from the arrangements and promoter fees. It may use its own records, information supplied by the customer or reasonable estimates. If fee information is missing, HMRC says it estimates fees by grossing up untaxed loans by 15%.
- Calculate simplified additional Income Tax and National Insurance for each year. HMRC excludes late-payment interest and income already taxed, and applies simplifying assumptions. Among other things, it uses Class 4 National Insurance rates and does not account for Scottish income tax rates, student loans, capital gains or the High Income Child Benefit Charge.
- Apply the annual promoter-fee reduction. The reduction is 10% of the first £50,000 of gross arrangement income and 5% of the next £100,000. It is capped at £10,000 per tax year and cannot reduce that year’s amount below zero.
- Add the remaining annual amounts and apply the individual reduction. HMRC adds the annual amounts, then deducts £5,000, not below zero. The total reduction is also subject to a £70,000 limit measured against the scheme’s defined Loan Charge gross liability. HMRC describes that comparison as a simplified calculation; it is not necessarily identical to every amount that could otherwise be due.
Payments already made towards the Loan Charge are generally credited against the calculated amount, subject to the detailed rules. HMRC’s policy impact note, published in 2025, estimated that most individuals who settle could reduce outstanding Loan Charge liabilities by at least 50%, and that about 30% could settle without paying anything. It also estimated that around 32,000 individuals and 5,000 employers could be affected. These are government estimates of expected impact, not a prediction of an individual’s eligibility or result.
Employer settlements
For an employer, HMRC calculates the settlement for each employee using the individual calculation and adds the amounts. HMRC says the employer does not pay secondary Class 1 National Insurance contributions under this scheme. The employer’s calculation and any payments it makes can affect the amount HMRC ultimately seeks from an individual.
How long do you have to accept?
HMRC’s implementation guidance says everyone will have at least 90 days to accept an offer. Some recipients have longer, depending on the status of their enquiry or appeal:
- If an enquiry is open, or an appeal has not yet been notified to the First-tier Tribunal, the offer generally remains open until the earlier of the liability becoming final or the appeal being notified to the Tribunal.
- If the liability is already final but unpaid, an appeal has already been notified to the Tribunal, or certain prior contract settlements apply, the offer generally has a 90-day response period.
Use the expiry date in the offer letter. Do not assume that the minimum period is your deadline or that another person’s deadline applies to you.
What should you check before deciding?
HMRC advises recipients to check the figures and consider whether they can pay the full amount at once. Compare the offer with records of the arrangements, the income and tax years it covers, promoter fees, tax already paid and any Loan Charge payments. If a figure appears wrong, HMRC says to contact the caseworker.
Payment arrangements can take account of a person’s financial circumstances. Under the new terms, instalments are available for up to five years with interest; a longer period may be possible depending on circumstances. Ask HMRC about the arrangement that applies to your case and the interest involved rather than treating an instalment plan as interest-free.
HMRC says people may want independent professional advice before deciding whether to accept. It identifies TaxAid for some people on low incomes and Citizens Advice as possible sources of free help. The right support will depend on your circumstances and whether your question concerns tax calculations, an appeal or affordability.
What does accepting or refusing mean?
Accepting creates a legally binding contract and ends compliance checks into the arrangements covered by the offer. If the offer amount is £0, it still takes effect only if you sign and return the acceptance form.
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