Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what recent assessment her Department has made of the effectiveness of the Loan Charge in meeting its intended objectives; and whether she plans to review that policy.

At Budget 2024, the Government commissioned an independent review of the loan charge to bring the matter to a close for those affected, ensure fairness for all taxpayers and ensure that appropriate support is in place for those subject to the loan charge. The review was led by Ray McCann, a former President of the Chartered Institute of Taxation.

The Government accepted the review’s conclusion that the loan charge was an extraordinary piece of Government policy which necessitated an exceptional response, and is now legislating a new settlement opportunity that will assist those who have not yet settled to do so.

As a result, most individuals could see reductions of at least 50% in their outstanding loan charge liabilities, and an estimated 30% of individuals could have these liabilities written off entirely. To encourage more people to settle, the Government will write off the first £5,000 of liabilities in addition to the proposals put forward by Ray McCann.

HMRC are committed to supporting people through this process and are working hard to give them certainty on their tax positions as quickly as possible. This includes a dedicated service to guide people through the settlement process and provide extra support for those who need it. HMRC can also provide reasonable adjustments to meet an individual’s needs.