The short answer
How HMRC's 2026 Loan Charge Settlement Scheme works for disguised remuneration loans, including eligibility, employer liability, discounts and payment plans.
HMRC has published a new Loan Charge Settlement Scheme for eligible individuals and employers with unpaid disguised-remuneration Loan Charge liabilities. The scheme is not a general amnesty and it does not decide whether every historical loan arrangement was valid. HMRC will write to people it believes are eligible with a settlement offer, and the offer letter controls the amount and the deadline.
The 2026 terms can reduce the amount payable through a simplified tax and National Insurance calculation, a promoter-fee reduction, a further £5,000 deduction and other rules. The total discounts are subject to a £70,000 limit. If you receive an offer, check the figures, the employer position and any trust or Inheritance Tax consequences before signing. The HMRC Loan Charge guidance remains the starting point for deciding whether the historical arrangement is in scope.
Wait for the offer details
Discounts are not one flat rate
The agreement is legally binding
Who the scheme is for
The scheme is aimed at an individual or employer with a disguised-remuneration Loan Charge liability that has not been paid in full. HMRC says this can include Income Tax, National Insurance contributions and late-payment interest arising because of the Loan Charge, because loans were received in earlier tax years, or because a post-1 June 2021 settlement included Loan Charge liabilities.
The underlying Loan Charge generally concerns third-party loans or similar amounts used as remuneration. HMRC's current overview says the arrangement may be in scope where the loan was made on or after 9 December 2010, received before the relevant 2017 or 2019 cut-off, was not repaid by 5 April 2019 and was not settled by 30 September 2020. Those are screening conditions, not a complete case determination. The arrangement documents, dates, repayment history and HMRC correspondence still matter.
HMRC is not required to make offers to people it suspects of being promoters or introducers of avoidance arrangements. If you think the records used in an offer are wrong, contact the caseworker named in the letter rather than assuming the published calculation is automatically correct.
How HMRC calculates an individual offer
The detailed implementation guidance describes a staged calculation. It is useful for understanding the offer, but it is not a substitute for HMRC's case-specific computation.
| Stage | What HMRC does | Important boundary |
|---|---|---|
| 1. Income base | Identifies loans, other income and promoter fees connected with the arrangements | HMRC may use information it holds, information supplied by the customer or a reasonable estimate |
| 2. Simplified liabilities | Calculates an amount representing additional Income Tax and National Insurance for the relevant years | The simplified calculation does not generally use Scottish rates, dividend or savings rates, Marriage Allowance, CGT, student loans or the High Income Child Benefit Charge |
| 3. Fee deduction | Deducts an amount for promoter fees | The deduction can be up to £10,000 in a tax year and is based on the published percentage formula |
| 4. Further deduction | Adds the remaining amounts and deducts £5,000 | The amount cannot fall below zero at this stage |
| 5. Discount cap | Applies the £70,000 total-discount limit where the legislation requires it | A capped discount can produce a higher settlement than the uncapped illustration |
For the promoter-fee calculation, HMRC's implementation page describes 10% of the first £50,000 of gross income in a tax year plus 5% of the next £100,000, subject to the £10,000 annual maximum and the other limits. When the fee information is unavailable, HMRC may estimate promoter fees by grossing up the untaxed loans by 15%. Do not infer that an estimate proves what the promoter actually charged.
The scheme can exclude or reduce some amounts that would otherwise appear in a full liability. HMRC says the simplified calculation does not include late-payment interest in the additional tax and National Insurance step, and the scheme normally removes certain penalties and covered Inheritance Tax liabilities. This does not mean every other tax or trust charge disappears.
What happens when an employer was responsible for PAYE
Where a UK employer still existed on 5 April 2019 and should have operated PAYE, HMRC says it will try to collect the relevant tax and National Insurance from the employer first. HMRC may send an offer to the individual at the same time so the individual understands the available route.
If the employer accepts, the individual's offer can be withdrawn and replaced with a reduced offer, or HMRC may confirm that the employer has settled the liability in full. If the employer is insolvent, does not settle or cannot pay, HMRC may contact the individual again with a revised offer. A personal service company with one individual director can be treated differently because the individual controls the company and HMRC may ask that person to settle before it completes the same employer-recovery sequence.
Keep the employer name, company status, payroll records and any previous settlement correspondence together. One person may have several employers or arrangements, so a payment made by one employer may reduce but not necessarily eliminate the remaining individual balance.
Offers, acceptance and payment plans
Most customers have at least 90 days to accept an offer. In many open-enquiry cases, the offer remains available until the earlier of the Loan Charge liability becoming final or an appeal being notified to the First-tier Tribunal. A smaller group, including some customers with a final unpaid liability or notified litigation, may have only 90 days. Use the exact expiry date in the letter.
Acceptance is a legal contract. You must complete, sign and return the acceptance form even if the offer shows £0 to pay. If you do not return it, HMRC says the original Loan Charge liability can remain payable. Contact HMRC before accepting if the figures do not match your records or if you cannot pay the balance in one payment.
HMRC says instalments can be available for up to five years under the new terms, with interest. A longer period may be possible depending on the circumstances. The instalment terms, affordability evidence and interest are case-specific; do not treat five years as an automatic entitlement or calculate a monthly payment from the headline settlement amount alone.
Inheritance Tax and other disguised-remuneration liabilities
Some arrangements use a trust and can create Inheritance Tax charges, including ten-year charges, charges when a loan is written off or charges when a trust ends. The settlement scheme can remove certain unpaid Inheritance Tax liabilities that have already arisen or arise within three months of the offer date, where they relate to arrangements being settled. Later liabilities may still need to be paid.
The offer can also include other outstanding disguised-remuneration liabilities that are outside the Loan Charge if HMRC opened the enquiry or issued the assessment by 26 November 2025. This is a date and case-status condition, not a general rule that all historic remuneration liabilities are included. Ask HMRC or an independent adviser to identify every liability covered by the proposed agreement.
A sensible response checklist
Review a Loan Charge offer in five steps
- 1Read the offer letter, note the acceptance deadline and check every loan, employer and tax year shown.
- 2Compare HMRC's figures with your contracts, payslips, bank records, promoter invoices, earlier payments and appeal correspondence.
- 3Ask the caseworker to correct or explain any mismatch before accepting; contacting HMRC does not itself commit you to settle.
- 4Check employer recovery, trust and Inheritance Tax consequences, and get independent advice for a complex or disputed case.
- 5If you accept, return the signed form and keep proof of delivery, the final agreement, payment record and any instalment terms.
Read the existing HMRC Tax Investigations guide if you are also dealing with an open compliance check, and use the HMRC Penalties & Appeals guide for general review and appeal context. Those pages do not replace the Loan Charge offer terms or specialist advice.
Frequently Asked Questions
Before signing a settlement or payment arrangement
Read the scope clause carefully. It should identify the tax years, loan arrangements, employer or intermediary, interest, penalties and any claims that remain open. Compare it with HMRC's calculation and the taxpayer's own chronology. If a promoter says a payment to it settles HMRC debt, stop and verify the official position independently.
Keep evidence of affordability and payments. A payment arrangement is not the same as cancellation, and missed instalments can create a new contact or enforcement problem. Record the official payment reference and check the HMRC account after the payment has had time to appear. Do not pay a second time because an unofficial portal says the first transfer failed.
If an earlier return, appeal or refund claim is affected, obtain written advice on how the settlement interacts with it. A settlement can resolve one liability while leaving employer reporting, National Insurance, interest or another tax year untouched.
A written settlement confirmation should identify the liabilities covered and the records the taxpayer must still retain.
Reconstructing a settlement file
A settlement review should begin with the original arrangements, not a preferred tax result. Collect contracts, payslips, loan statements, scheme correspondence, employer records, previous returns, HMRC notices and evidence of tax already paid. Build a year-by-year timeline showing when the payment arose, when the loan was made, when it was repaid or released, and which entity was involved.
Keep the loan charge separate from ordinary employment income, National Insurance, interest and penalties. A settlement amount may include more than one component, and a payment to a promoter or intermediary is not proof that HMRC liability has been cleared. Confirm the official reference and payment route before transferring money.
If the taxpayer cannot pay in full, contact HMRC through its official channel about payment options. Do not assume that a settlement scheme changes filing deadlines, removes interest, or resolves a separate employer dispute. Obtain written confirmation of what years and liabilities the agreement covers, then retain it with the returns and bank evidence.
Is the Loan Charge Settlement Scheme available to everyone with a disguised-remuneration loan?
Does the scheme cancel the full Loan Charge?
What is the £70,000 Loan Charge discount limit?
What if my employer should have operated PAYE?
Can I pay the settlement by instalments?
Do I still need to sign a £0 settlement offer?
Should I accept the offer without professional advice?
What documents should I check before accepting a Loan Charge settlement?
Use the HMRC offer letter and current official guidance as the controlling documents. This guide is general information, not a calculation of your settlement amount or professional tax advice.
Official sources
- HMRC: Find out about the Loan Charge Settlement Scheme
- HMRC: How the settlement scheme will be implemented
- HMRC: The Loan Charge
- Legislation.gov.uk: Finance Act 2026
- HMRC: Disguised remuneration settlement terms 2020
These HMRC and legislation pages are the official references for eligibility, implementation, the Loan Charge and settlement terms. Check the offer letter and current HMRC correspondence before accepting any arrangement.
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Review notes and assumptions
Reviewed
2026-09-20
Assumptions
- This guide describes HMRC's published 2026 settlement terms and does not determine whether a particular arrangement, liability or trust event is covered by the scheme.
- The settlement amount depends on HMRC's records, the arrangement, employer status, previous payments, tax years, appeals and other liabilities; the examples below are explanatory rather than personal calculations.
- A person considering acceptance should review the offer letter and obtain independent tax advice where the facts, employer position, trust or litigation history is complex.