Loan charge settlement scheme announced

Thousands of individuals and employers with outstanding Loan Charge liabilities are being urged to take advantage of a new settlement scheme that could cut their bills by up to £70,000.

HM Revenue and Customs (HMRC) says the scheme will see most bills reduced, with around a third able to settle without paying anything at all.

It is now writing to those eligible and is asking anyone who receives a letter from their caseworker to respond as soon as possible.

The Loan Charge was introduced by the taxman to tackle arrangements in which individuals received remuneration through loans rather than conventional salary. It worked by adding together all outstanding loans and taxing them as income in one year.

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.”

Bills could be reduced by up to £10,000 for each year someone used an avoidance arrangement. HMRC will also remove late payment interest and apply a £5,000 reduction to every customer’s bill.

Those who cannot pay in full straight away will be able to agree a payment arrangement based on what they can afford.

HMRC says anyone who settles under the new terms can choose to pay over five years, with longer arrangements available depending on their circumstances.

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