The loan charge has made headlines in recent months due to the second major independent review of the loan charge legislation. Ray McCann offered his findings and these were published alongside the government’s response with the autumn budget 2025. There will be a 2026 settlement opportunity for all those impacted by the loan charge and yet to settle, and the expected terms of the new settlement opportunity are comparatively generous.
At Menzies, our tax dispute specialists are ready to support any eligible taxpayer once the new legislation is enacted and the scheme is open. Read on to see what we can expect from the new opportunity, and how Menzies can support you in settling any tax avoidance scheme liabilities.
What is the new loan charge settlement opportunity and why is it needed?
We discuss the history and evolution of the loan charge in our blog here. In summary, the loan charge was introduced in 2017 in order to try and encourage taxpayers to settle historic disguised remuneration schemes. If they didn’t do so within the timeframe given, they would instead be subject to the more punitive loan charge. The charge is a tax on all elements of remuneration that were paid as ‘loans’ and previously escaped tax, and it ‘stacked’ all the tax years such that loan amounts were treated as one receipt as at 5 April 2019.
Due to reasons such as financial hardship, or scheme promoters advising individuals that the loan schemes really did work, there are still an estimated 32,000 taxpayers who are impacted by the loan charge and who still haven’t settled with HMRC. The government needed to adopt a new strategy to encourage those who had resisted settling their use of the schemes to do so, and the hope is the new settlement opportunity will encourage all remaining users to come forwards.
This opportunity is being introduced as a final chance to settle income tax liabilities that are due on the historic disguised remuneration schemes. The terms are favourable, and in some cases will reduce liabilities to zero.
What are the new terms of the loan charge settlement opportunity?
At the time of writing, the legislation is yet to be enacted and so the details are subject to change. However, based on the draft legislation and the government’s response to the McCann review, we do not anticipate there will be material adjustments from the published terms.
A summary of the existing rules where the loan charge applies compared to the expected 2026 loan charge settlement opportunity terms are below:
| Loan charge | 2026 loan charge settlement opportunity |
| ‘Stacked’ – total outstanding ‘loan’ balance chargeable to tax as at 5 April 2019 | Unstacked – puts liabilities back in corresponding tax years |
| Full statutory late payment interest chargeable | Late payment interest written off * |
| Penalties generally not charged | No penalties charged |
| Potential inheritance tax charges depending on trust setup | No IHT charges |
| Promoters fees generally only deductible where evidence retained | % deductions to account for promoter fees, and £5k one-off deduction for all * |
| Payment terms affordability based, additional information usually required for terms longer than 12 months | Payment terms of up to 5 years automatically granted. Longer terms available if affordability information supplied |
* The total amount of deductions available to any one taxpayer is £70,000, including the late payment interest, promoter fee deductions, and the £5,000 deduction. No deduction can take a liability to less than nil. If the loan charge liability is more than £70,000 higher than the new settlement opportunity liability, then the revised settlement liability will be the original loan charge liability less £70,000.
What do I have to do to settle under the new loan charge settlement opportunity
HMRC have already begun writing to taxpayers who they believe are impacted by the loan charge and will therefore be eligible for the 2026 loan charge settlement opportunity. At present, the letters only state that the new opportunity is going to open and that HMRC will write with further details. The letter does invite taxpayers who are interested in settling under the new opportunity to confirm by response.
If you haven’t received a letter about the loan charge but believe you are impacted and are interested in settling under the new terms, it is still possible you may be eligible for the opportunity. At the time of writing the new settlement terms are not available to those involved in tax avoidance schemes that were not subject to the loan charge, however this stance is proving controversial so may change in the future.
If you need support in settling any tax avoidance liability whether it is under the loan charge opportunity or not, please get in touch without delay for a free and confidential consultation.
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