Up to 40,000 individuals and businesses have been sent letters by HMRC offering them a settlement package to resolve outstanding loan charge bills, but it appears that take-up of the scheme may not be as high as expected.

Now HMRC is ramping up publicity about the scheme, urging taxpayers to take action as it has started writing to eligible taxpayers after legislation came into effect on 5 August. For an issue that has dragged on for years, HMRC is asking ‘anyone who receives a letter from their caseworker to respond as soon as possible so we can help resolve this’.  

‘These arrangements can be complicated and take some time to work through, which is why every customer has a named contact they, or their agent, can speak to,’ HMRC stressed.

When asked how many loan charge taxpayers had paid as yet, HMRC confirmed ‘we intend to release the settlement figures in the coming months’. 

The loan charge settlement scheme ‘could see 50% reductions and some will pay nothing at all’, HMRC said, adding this ‘could reduce their bills by up to £70,000’.

HMRC said the loan charge settlement scheme ‘will see most customers’ bills reduced, with around a third able to settle without paying anything at all’.

Once a settlement offer is made, HMRC confirmed ‘90 days is the minimum period the loan charge legislation allows for acceptance of a loan charge settlement offer. For the majority of customers HMRC will allow a longer period’.

The statutory instrument, SI 2026 No.821, The Employment and Trading Income etc (Loan Charge Settlement Scheme) Regulations 2026, was laid on 15 July, effective from 5 August 2026.

This clarifies the length of time taxpayers have to make a settlement offer. SI 2026 No. 821, Part 4, section 9 on settlement offers, states:

(8) The period in which a settlement offer is open for acceptance is —

(a) 90 days, or

(b) such longer period as the Commissioners may reasonably determine, beginning with the day the offer is made.

(9) Where a settlement offer made is a further offer under para (7)(c), the period in para (8)(a) is 30 days.

(10) Relevant loan charge amounts —

(a) must not include amounts which are the subject of, or under, a contract settlement entered into before 1 June 2021;

(b) may include amounts which have been assessed (including self-assessed), whether or not that assessment is final.’

Named HMRC contact

Earlier in the year, all those affected by loan charge demands were assigned a named HMRC contact to handle their settlements, with letters going out to confirm details of this person.

The onus then shifted to the taxpayer to contact their specific case worker to find out about this individual tax position and liability.

The onus then shifted to the taxpayer to contact their specific case worker to find out about this individual tax position and liability. But there is extreme complexity when settling so it is advisable to seek professional advice before signing off with HMRC.

Richard Philson, a tax dispute resolution director at BDO said: ‘The new 2026 loan charge settlement scheme provides for deductions and incentives which have not been available in previous settlement terms. 

‘It also provides for inheritance tax due because of the use of loan schemes to be written off, a further benefit which could, in some cases, be quite significant. This requires the underlying arrangement (for example, a trust) to be closed down. This will be separate from the settlement with HMRC – but is important not to be overlooked.

‘Those affected, or those who think they may be affected, can either wait until HMRC contacts them, or they can approach their adviser to help in liaising with HMRC to reach a settlement.

‘At this stage, we don’t know when HMRC will write to those affected but with tens of thousands of taxpayers in scope, this may take some time.

‘ Most cases, regardless of the money involved, are horribly complex and do require specialist tax advice based on the specific facts and circumstances of the arrangement.’

The 2026 settlement scheme is the result of the McCann review last year, which set out a way to resolve the long-standing loan charge issue. HMRC and the government is very keen to settle this long running issue, which dates from 2017 when the loan charge was introduced to tackle disguised remuneration schemes. The tax authority viewed these as ‘contrived tax avoidance schemes’ designed to avoid charges of income tax and National Insurance by disguising remuneration as a form a non-taxable payment, typically a loan.

Jonathan Smith, director of counter avoidance at HMRC, said: ‘We want to help people draw a line under their loan charge liability and reach a resolution - but that can only happen if you talk to us.

‘Some people will see their bills reduced to zero and that is why we need them to engage with us. Our message is simple: get in touch so we can help you resolve this.

‘You don’t have to wait for your letter from us - you can contact your named caseworker at any time to discuss the settlement opportunity.’

Figures are not available on how many taxpayers have settled under the new loan charge scheme, but HMRC told Business & Accountancy Daily ‘we intend to release settlement figures in the coming months’.

Useful links

Loan charge taxpayers sent letters with named HMRC contact | 10 Feb 2026

How loan charge bills will be calculated | 1 Dec 2025

Treasury confirms loan charge settlement will cost £365m | 27 Nov 2025

Loan charge repeal would not be a fair outcome, says McCann | 18 Mar 2026

Legislation, SI 2026 No.821,  The Employment and Trading Income etc (Loan Charge Settlement Scheme) Regulations 2026