Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential impact of settlement terms for loan charge liabilities in place (a) before and (b) after 2021 on the finances of people affected.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
The focus of the Independent Review of the Loan Charge was on taking action to help those individuals who do not yet have certainty about their liabilities, or who still owe money, to move on from this matter. The review identified affordability as a key barrier preventing some individuals from settling and made recommendations to remove this barrier.
The Government has gone further in supporting people on the lowest incomes by providing an additional £5,000 deduction for those in scope of the review. This entirely removes approximately 10,000 individuals from the charge. This will come at a substantial Exchequer cost over the next five years.
It represents the Government’s attempt to provide a fair route to resolution for those who have not settled with HMRC. In turn, those people need to come forward and engage with HMRC in good faith.
Asked by: Neil Duncan-Jordan (Labour - Poole)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many outstanding Loan Charge cases will be settled as a result of the McCann Review.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
I refer the Hon. Member to the answer I gave on 9 February 2026 to UIN 109841.
Asked by: Neil Duncan-Jordan (Labour - Poole)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment she has made of the value-for-money of the Loan Charge.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
I refer the Hon. Member to the answer I gave on 9 February 2026 to UIN 109841.
Asked by: Neil Duncan-Jordan (Labour - Poole)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment she has made of the effectiveness of the Loan Charge and HMRC’s approach to dealing with so-called disguised remuneration schemes.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
I refer the Hon. Member to the answer I gave on 9 February 2026 to UIN 109841.
Asked by: Afzal Khan (Labour - Manchester Rusholme)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps HMRC is taking to investigate salons that may not be paying employer National Insurance contributions, VAT liabilities, or pension obligations through the misclassification of staff as self-employed.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HMRC’s priority is to ensure that everyone pays the tax they are legally required to pay including those in the hair and beauty sector.
HMRC’s approach focuses on preventing non‑compliance from arising in the first place by providing clear guidance and tools. In the case of salon owners and workers, additional support to get their tax obligations right has been provided in collaboration with trade bodies. To help support these customers, HMRC has worked with trade bodies for this sector to develop new educational material and has published guidance on GOV.UK to better explain the employment status and tax implications of different business models. Details can be found at: https://youtu.be/5o3au6PyXG8 and https://www.gov.uk/guidance/check-employment-status-if-you-work-in-hair-and-beauty
At the same time, HMRC is actively tackling disguised employment in salons and making it harder for the minority who deliberately misclassify workers to avoid paying employer National Insurance, VAT, or pension contributions. HMRC carries out targeted compliance activity to identify cases where individuals presented as self‑employed are, in reality, working as employees.
HMRC is committed to tackling false self-employment and will investigate evidence that suggests businesses have misclassified individuals for tax purposes. To report a person or business you think is not paying enough tax please click Report tax fraud or avoidance to HMRC - GOV.UK for more information.
Asked by: Bobby Dean (Liberal Democrat - Carshalton and Wallington)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential impact on of the Loan Charge on individuals subject to it; and whether governance mechanisms are in place for people in serious financial and personal distress.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
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.
Asked by: Bobby Dean (Liberal Democrat - Carshalton and Wallington)
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.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
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.
Asked by: Bobby Dean (Liberal Democrat - Carshalton and Wallington)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether she has made an estimate of the (a) cost to HMRC of administering the Loan Charge since 2019 and (b) total amount recovered in that period; and what assessment she has made of the value for money of that policy.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
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.
Asked by: Freddie van Mierlo (Liberal Democrat - Henley and Thame)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential merits of setting a maximum settlement reduction of £70,000 under the revised loan charge settlement arrangements.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
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.
Because of the decisions the Government has taken, around 30 percent of people within scope of the review could have their liabilities removed entirely. Most other individuals will see their liabilities reduced by at least half.
The most serious cases within scope of the Loan Charge review include instances where an individual has avoided more than £5 million of tax through disguised remuneration use. The Government does not believe it is right to offer this group further substantial reductions to their liabilities. The £70,000 cap was introduced to ensure fairness for all taxpayers, including the vast majority who have never used disguised remuneration schemes.
Over 80% of individuals that are within scope of the settlement opportunity will not be affected by the cap.
Asked by: Mohammad Yasin (Labour - Bedford)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment she has made of the adequacy of the proposed loan charge settlement scheme cut off date of 1 June 2021 for excluding taxpayers who have entered into contract settlements with HMRC before that date; and what steps she has taken to help ensure that taxpayers who settled earlier are not disadvantaged compared with those who settle under the new scheme.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
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 purpose of the review was to bring the matter to a close for people who have not settled and paid their loan charge liabilities. Although the loan charge officially came into force from 6 April 2019, the deadline for settling to avoid being liable to the loan charge was extended because of the Morse Review. The settlement opportunity applies after 1 June 2021 because it is from that date onwards that loan charge settlements were agreed.
The review identified affordability as a key barrier preventing those individuals from settling and made recommendations to remove this barrier. The Government accepted all but one of the review’s recommendations and will legislate to give HMRC the power to administer a new settlement scheme.
The Government has no plans to apply the recommendations of the review beyond those individuals and employers with outstanding liabilities that were the focus of the review.