HM Revenue and Customs has begun writing to thousands of people and employers with outstanding Loan Charge liabilities, inviting them to settle under a new scheme that it says could reduce their bills by up to £70,000.
The tax authority said most customers would see their bills reduced, with around a third able to settle without paying anything at all. Anyone who does not settle will have to pay the full amount of the Loan Charge.
The Loan Charge Settlement Scheme legislation came into force on 5 August 2026 and HMRC has started contacting customers to make settlement offers. The department is asking anyone who receives a letter from their caseworker to respond as soon as possible, and said every customer has a named contact they or their agent can speak to, because the arrangements can be complicated and take time to work through.
Under the scheme, bills could be reduced by up to £10,000 for each year a customer used an avoidance arrangement. HMRC will also remove late payment interest and apply a £5,000 reduction to every customer’s bill. The department says that, overall, most people could see reductions of at least 50 per cent in what they have to pay.
Customers who cannot pay in full straight away will be able to agree a payment arrangement based on what they can afford. 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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