The dust has not yet settled on the independent review of the loan charge I carried out in 2025, with HMRC still working through how to take forward the pivot that the outcome of my review involves for those who, in January 2025, were still to settle their loan scheme liability.

It will be some time yet before the full new settlement terms are clear, with HMRC still drafting the necessary Treasury regulations for agreement by the Government to give effect to the settlement opportunity. Those still to settle should not wait, since early engagement with HMRC is likely to help bring the loan charge to a close sooner rather than later and is HMRC’s preferred approach.

Reducing and eliminating liabilities

I have no doubt that the senior leadership of HMRC want the whole loan scheme saga to come to an end; we all do.

However, while we await the full detail of the settlement terms, the negative tone in much of the social media commentary has continued despite the outcome of the review meaning that some 10,000 individuals, based on government estimates, will have no liability at all.

The remaining 22,000 (based on the data supplied to the review by HMRC) will see a reduction in their liability. For this group, government estimates suggest an average reduction of 50%.

There is inevitably at this stage some uncertainty in the final numbers. But it is clear that the barriers that prevented the large majority of those involved from settling are being removed or substantially reduced.

In its response, the government capped the maximum reduction in liability at £70,000 although this does not include any inheritance tax (IHT) that is written off.

On HMRC’s data this cap is expected to affect only some 20% of those still to settle and even there its impact should be graduated with many of those affected still benefiting from a substantial proportionate reduction in their overall liability.

Repeal would not be a fair outcome

Some remain unhappy; for them only repeal (or effective repeal) would have been enough. In my view, no convincing case for repeal has ever been made.

As explained in my report, the design of some aspects of the loan charge meant that unfairness was built into it. Lord Morse addressed much of this unfairness, and my review recommended removal of other aspects that I considered were unfair and were likely to prevent settlement.

My recommendations left those still liable to the loan charge facing tax charges broadly equivalent to what they would have paid on earnings of that amount for each year of use, but without the added charges of late payment interest, inheritance tax, and penalties.

In 2024, the Loan Charge Action Group called for ‘a fair resolution’. Repeal would have been anything but fair to the many millions of taxpayers who expect the government to ensure that the tax system is fair and that there are effective defences against tax schemes.

This balance between the general body of taxpayers and those remaining within scope of the loan charge was a key issue for the review since, unless it was at the heart of its conclusions, the risk that the government would reject more or perhaps all of my recommendations would be increased.

And, even if the loan charge was repealed, it would still have left many thousands of individuals subject to open HMRC enquiries.

Providing relief from the consequences of delay

As my report made clear, the weakness in HMRC’s strategy was not that it failed to open enquiries; far from it, it was that HMRC did not effectively progress those enquiries within a reasonable timeframe so leaving thousands of individuals under enquiry for year after year, building up huge amounts of late payment interest, and so subject to the anxiety and stress such uncertainty will inevitably cause.

For many individuals, struggling to pay whatever tax liability the loan charge imposed, late payment interest could represent an insurmountable barrier and with advanced payment notices (APNs) and claims by HMRC to inheritance tax, a complex web of liabilities made finding a settlement impossible for many.

My recommendations were intended to provide relief from the consequences of such lengthy delays by removing late payment interest and the uncertainty caused by confusion as to when penalties and inheritance tax would be charged.

Together with a promised more responsive customer service approach by HMRC, the outcome of my review represents a fair resolution for those who were still liable to the loan charge.

Groups not subject to the loan charge

Inevitably there have been criticisms levelled at the review outcome, most obviously that it did nothing for those who had already settled their loan scheme liabilities or those individuals and employers who have open enquiries for years prior to 2010.

Neither of these groups are subject to the loan charge, and they give rise to a range of different issues. As was mentioned in my report, for both groups, the outcome of the review gives rise to potential unfairness and from the outset HMRC and HM Treasury have been aware of my concerns.

To the extent that any such unfairness is to be considered, it will be for government to address, if HMRC’s ‘care and management’ responsibilities do not allow it sufficient discretion in this regard.

It should also be clear that on 23 January 2025, when my review began, there was no guarantee that the government would accept any of the recommendations I subsequently made, so at that stage what, if anything, should be done in this regard was academic.

Conclusions

A review of this sort could never have an outcome that would suit everyone: there are too many different taxpayer groups, too many variations in the type of loan schemes that were marketed, an enormously complex legislative framework, far too many taxpayers willing to believe whatever the promoters said, and widespread non-compliance by the promoters.

However, as I said in my report, this must never be allowed to happen again.

About the author

Ray McCann CTA (Fellow), ATT (pictured), was chair of the 2025 Loan Charge review, and is a tax consultant at Joseph Hage Aaronson & Bremen LLP, past president of the Chartered Institute of Taxation (CIOT), and spent more than three decades at HMRC until the mid 2000s, where he was assistant director

This article was first published in Croner-i Navigate Tax Weekly > Issue 208 > 11 March 2026 > Loan charge – reflections on a review

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