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Budget: New loan charge settlement opportunity

Author: ICAEW Insights

Published: 02 Dec 2025

The government has said it will accept almost all of Ray McCann’s recommendations for a new settlement opportunity and go further by writing off the first £5,000 of debt, in the hope that this will give individuals “a path to resolution”.
In January 2025, the government asked Ray McCann to carry out an independent review of the loan charge. The aim of the review was to draw a line under this long-running issue for those who had not yet settled their liabilities.  

What is the loan charge?  

A charge on disguised remuneration (DR) loans, known as the loan charge, came into effect on 5 April 2019 to tackle the use of DR schemes. Under the schemes, individuals had their salary paid in loans in order to attempt to avoid having to pay income tax and national insurance contributions. It is estimated that 45,000 individuals used a DR scheme that is affected by the loan charge, of which only 12,000 have had their cases resolved, including  7,000 who have done so by contract settlement.   

Recommendations 

McCann has now concluded his review, making nine recommendations for the government:  

  1. Introduce a new settlement opportunity for those who have yet to settle their liability.
  2. Suspend part of the overall liability for a certain period and write it off at the end of that period if the conditions have been adhered to.
  3. Calculate the suspended liability for each tax year, suspending inheritance tax (IHT), late payment interest, penalties and allowing a deduction of up to 10% of the loan scheme income for fees paid to promoters.
  4. Agree “more straightforward” payment plans over five or 10 years, with the remainder suspended for those who cannot afford to pay in full in 10 years.
  5. Take an exceptional approach for those whose only income is the state pension or universal credit.
  6. Offer employers improved payment terms, allow corporation tax deductions and do not apply penalties or IHT.
  7. Improve disclosure of tax avoidance schemes (DOTAS) notifications by requiring promoters to provide scheme users with a certificate making clear that the scheme is avoiding tax, with criminal sanctions for promoters who fail to comply.
  8. Prevent promoters and linked entities from providing additional tax services, such as self assessment filing for the same individual.
  9. Improve HMRC communications with customers. 

Government’s response 

In its response to the review, published alongside the Autumn Budget 2025, the government has said it will proceed with almost all of the nine recommendations. The government has rejected part of recommendation 4 to cap payment plans at 10 years, and instead will offer instalment plans beyond 10 years.  

The government has also said that it will go further in several areas and will write off the first £5,000 of debt for all those who take up the settlement offer. 

ICAEW comment 

Katherine Ford, Technical Manager for personal taxes said:  

“We welcome both the report and HMRC’s acceptance of the majority of the recommendations, as a way of bringing this long-running saga to a sensible conclusion. We would be glad to assist HMRC with its implementation if we can.  

ICAEW members have long recognised that disguised remuneration schemes don’t work, and we don’t believe there are any ICAEW Chartered Accountants currently involved in promoting them. In 2017 we changed the rules for chartered accountants working in tax so that they can be disciplined if they create, encourage or promote any unethical and egregious tax planning schemes, even if the schemes themselves remain legal. 

While most of the promoters of these schemes are not professional body members and are often based overseas, we would nevertheless encourage anyone who has concerns around the conduct of an ICAEW member to report this to our Professional Standards team”. 

Further information 

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