
An independent review into the Loan Charge has been launched by James Murray, Exchequer Secretary to the Treasury. It will be led by Ray McCann, former president of the Chartered Institute of Taxation, and is expected to conclude in summer 2025.
Loan schemes have existed since at least the mid-1990s and have been considered by the courts. In the most notable case in 2017, the Supreme Court agreed with HMRC that schemes that redirect earnings and ultimately pay them in the form of loans do not succeed in avoiding tax.
In a further decision in 2022, the Court of Appeal confirmed that even where other parties (such as employers or agencies) have obligations to operate pay-as-you-earn (PAYE), the liability for income tax is that of the employee.
The Government said it recognises the decisions of the courts and believes it is right that those who did not pay the right amount of income tax and National Insurance are required to resolve their affairs with HMRC.
However, there remain ongoing concerns about how much tax some workers owe and their ability to pay the money owed in a reasonable time frame.

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What is the Loan Charge?
The Loan Charge relates to the way contractors were paid in the early 2000s. Thousands of self-employed workers signed up for loan schemes, believing them to be HMRC-compliant.
These loan-based remuneration schemes were typically run by offshore employee benefits trusts, and were often marketed as a way for contractors and freelancers to bolster their take-home pay.
Tax advisers often advised workers who were employed through umbrella companies to join such schemes. In some instances, contractors were told they would be unable to work for certain organisations unless they agreed to be paid via the loans.
The Loan Charge, first announced in 2016, is a piece of retroactive legislation designed to help the Government recoup the tax it claims participants avoided paying between December 2010 and April 2019. It has meant that thousands of workers have been hit with life-changing and unaffordable tax bills.
The aim of the review
The new independent review aims to bring the matter to a close for those affected while “ensuring fairness for all taxpayers and that appropriate support is in place for those subject to the Loan Charge”.
McCann will review the barriers preventing those subject to the Loan Charge from reaching resolution with HMRC and recommend ways in which they can be encouraged to do so.
The Government said its response to the review “will be consistent with its approach to closing the tax gap and the fiscal position”.
McCann said: “The controversy surrounding the Loan Charge has for too long acted as a barrier to bringing matters to a close for both the individuals involved and for HMRC.
“I was pleased to be asked to help find ways whereby those involved can reach an agreement with HMRC that balances their right to be treated fairly with the expectation of the vast majority of taxpayers who have paid all of the tax and NIC due on their earnings. My review will be entirely directed to that end.
“The review was first announced at the Autumn Budget 2024. The reviewer will present their final report to the Exchequer Secretary to the Treasury by summer 2025.”