The Employment and Trading Income etc. (Loan Charge Settlement Scheme) Regulations 2026

Explanatory Note

(This note is not part of the Regulations)

These Regulations establish the Loan Charge Settlement Scheme following the government’s response, published at Budget 2025, to the Independent Loan Charge Review of Mr. Ray McCann. They set out when and how settlement offers may be made and settlement agreements reached with those who are liable to pay amounts of income tax and national insurance contributions to which the loan charge (Schedules 11 and 12 to the Finance (No. 2) Act 2017 (c. 32)) applies, together with other connected amounts. The Regulations also make provision for inheritance tax relating to those who enter into settlement agreements.

Regulation 1 addresses the title and the commencement of the Regulations.

Regulations 2 to 5 set out the definitions used in the Regulations, the key ones being ‘loan charge amounts’, ‘loan charge gross liability’, and ‘specified connected amounts’.

Regulation 6 provides for the methodology for the determination of amounts used in the calculation of settlement offers and also for the loan charge gross liability with which the amounts in those offers are compared (see regulation 10).

Regulation 7 establishes the Scheme, the rules of which are set out in the Regulations, and provides that the Commissioners are responsible for the Scheme.

Regulation 8 sets out who is entitled to participate in the Scheme and on what conditions.

Regulation 9 sets out the main requirements of a settlement offer under the Scheme and its key terms and effects.

Regulation 10 sets out the primary method by which settlement amounts in an offer should be calculated. Regulation 11 sets out an adapted method where the offer is made to a corporate employer.

Regulation 12 provides for conditions to be made in an offer that certain other liabilities may be paid or other matters addressed, including the resolution of existing litigation and the form in which the settlement agreement may be concluded.

Regulation 13 makes general provision for payments.

Regulation 14 makes provision for the crediting of payments made before the day of the settlement agreement under the Scheme towards liabilities under the settlement agreement.

Regulation 15 addresses the inheritance tax treatment that will apply under the Scheme if a settlement agreement is entered into.

Regulation 16 deals with notices under the Regulations and regulation 17 makes transitional and supplementary provision.

A Tax Information and Impact Note covering this instrument is published on the website at https://www.gov.uk/government/publications/loan-charge-independent-review/loan-charge-review .