Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what estimate he has made of the total revenue generated by the Loan Charge during its lifespan.

The Loan Charge was announced at Budget 2016 as part of a package of measures to tackle Disguised Remuneration (DR) tax avoidance. The forecast was last revised at Spring Budget 2021, with the latest estimated overall Exchequer yield of £3.3 billion for the entire package, which includes the Loan Charge.

In September 2019, the Government commissioned an Independent Review into the Loan Charge, led by Lord Morse. The Government accepted 19 of the 20 recommendations made by the review. Changes to the Loan Charge were estimated to reduce the forecast yield. At Budget 2020, the changes were costed as a separate measure, with an estimated reduction to the Exchequer yield of £745 million.

No estimate can be provided for the number of people who have fallen into debt or who have been declared bankrupt that are subject to the Loan Charge.

Where debts arise, HMRC are not always the only creditor. Some individuals are declared bankrupt as a result of a non-HMRC debt and some individuals may choose to enter insolvency themselves based on their overall financial position.

HMRC only ever considers insolvency as a last resort, and they encourage taxpayers to get in contact to agree the best way to settle their tax debts. To date, HMRC has not initiated insolvency proceedings against any taxpayer for a Loan Charge debt.

HMRC will go to the employer to settle the tax due or collect the Loan Charge in the first instance. Approximately 80 per cent of the £3.3 billion HMRC has brought into charge through DR settlements between Budget 2016 and the end of March 2021 has been from employers.

However, HMRC will consider other options to collect the tax where collection from the employer is not possible, such as when the employer no longer exists or is based offshore. Liability for the tax is always that of the individual. Parliament has provided a range of powers allowing HMRC, in certain circumstances, to collect the amount due from the employee.