Disguised Remuneration: has HMRC written to your clients yet?

As many will have expected, the initial letters provide limited detail, however it does state that the new settlement opportunity will produce a lower liability than the amount currently due under the existing loan charge rules.

HMRC has indicated that further letters will follow from “Spring 2026”, setting out the settlement process, the review findings and what the revised settlement terms will look like in practice.

For thousands of people caught up in the Loan Charge, the process to date has been lengthy and difficult, with HMRC’s previous settlement opportunity including various liabilities that in our view, have unfairly been included, including asking clients to settle company NIC contributions as part of individual settlements, when there is no existing statutory basis to allow for this transfer.

There is also the well discussed concern around HMRC pushing for the inclusion of section 222 liabilities into any settlement opportunity under the previous regime. This charge arises where a director “fails” to reimburse the employer with PAYE it never actually paid over to HMRC – a surreal tax charge on a “benefit” that was never received by the individual.

Some arrangements that have been successfully challenged by HMRC at tribunal have resulted in incredibly punitive outcomes, in some cases when factoring in all relevant tax charges and interest, can end up with a tax rate approaching 100%.

When considering the significant liabilities involved, and the late payment interest rate at 7.75%, it is important to position yourself at the front of the queue and early engagement with HMRC is critical. HMRC has already indicated that taxpayers do not need to wait to express an interest in settling under the new terms.

HMRC are yet to issue revised computations, or clear communication on how exactly the new terms will be applied, but we would anticipate these to begin flowing through in the immediate future.

For a lot of clients these settlements will still involve significant sums, however HMRC has confirmed that liabilities will be reduced by the following amounts, up to a maximum reduction of £70,000:

• A discount for historic promoter fees, capped at £10,000 for each year the taxpayer used a loan scheme.
• A further flat £5,000 reduction.
• Removal of late payment interest.

In addition to the above reductions, and outside of the £70,000 cap:

• Any inheritance tax arising from the use of loan arrangements will be written off.
• Penalties will not be charged as standard.

These revised terms will provide meaningful improvements for most affected individuals. However, it will still be essential to carefully review the updated HMRC computations when they are issued. Only then will it be clear to what extent each client’s position has improved and whether further steps are required.

If you would like to discuss settlement with HMRC or any disguised remuneration issues please contact us.