Legislation – Finance Act 2026

The Treasury must by regulations provide for a scheme under which persons who are liable to pay loan charge amounts may enter into an agreement (“a settlement agreement”) with the Commissioners as regards those amounts.

(2)

The scheme must provide that the Commissioners must, in accordance with the scheme, make an offer to enter into a settlement agreement (“a settlement offer”) to every person who—

(a)

they believe is liable to pay loan charge amounts, and

(b)

is not a person who the Commissioners reasonably suspect is, or has at any time been—

(i)

a promoter or introducer for the purposes of Part 7 of FA 2004 (disclosure of tax avoidance schemes), or

(ii)

a director or shadow director of such a person.

(3)

The scheme must provide that a settlement offer made to a person (P) must—

(a)

set out the terms of the proposed settlement agreement, including—

(i)

the loan charge amounts to which it would apply (“relevant loan charge amounts”), and

(ii)

the amount P would instead be required to pay under it (“settlement amount”), and

(b)

remain open to P for such reasonable period as may be specified by the scheme.

(4)

The scheme must provide that the relevant loan charge amounts must not include loan charge amounts which are the subject of, or under, a contract settlement entered into before 1 June 2021.

(5)

The scheme must provide that if P enters into the proposed settlement agreement with the Commissioners—

(a)

every relevant loan charge amount ceases to be, or will no longer become, payable by P, but

(b)

P is instead liable to pay the settlement amount.

(6)

The scheme must provide for the calculation of P’s settlement amount and must secure—

(a)

that amounts are arrived at by—

(i)

determining the value of the Schedule 11 or 12 to F(No. 2)A 2017 loans and quasi-loans to which the relevant loan charge amounts are connected,

(ii)

determining the other amounts paid to P under the arrangements under which those loans or quasi-loans were made,

(iii)

determining the amounts charged to P (as deductions, fees or otherwise) under those arrangements,

(iv)

attributing the amounts determined as mentioned in sub-paragraphs (i) to (iii) to tax years in accordance with the scheme and assuming that income tax and national insurance contributions were payable as regards those tax years in relation to those amounts, and

(v)

on that assumption, determining the total amount for each of those tax years of the additional income tax and national insurance contributions which would have been payable by P as regards the tax year (“starting amount”),

(b)

that the starting amount for each tax year is lowered (but not below nil) by the amount that results from adding together—

(i)

the amount of reduction given by reducing by 10% the first £50,000 of the total amount attributed to the tax year under paragraph (a)(iv), and

(ii)

the amount of reduction given by reducing by 5% the next £100,000 of that total,

(c)

that the amounts produced by this are added together and the resulting amount is lowered by £5,000 (but not below nil),

(d)

that this lowered amount is the settlement amount, unless it is more than £70,000 lower than P’s loan charge gross liability, and

(e)

that, if that lowered amount is more than £70,000 lower than P’s loan charge gross liability, the settlement amount is instead P’s loan charge gross liability minus £70,000.

(7)

In this section—

“loan charge amount” means an amount which—

(a)

arises in connection with a Schedule 11 or 12 to F(No. 2)A 2017 loan or quasi-loan,

(b)

is not an amount of inheritance tax,

(c)

is payable, or becomes payable in the future, to the Commissioners under or by virtue of any enactment or under a contract settlement, and

(d)

has not yet been paid;

“loan charge gross liability”, in relation to a person, means the total of the loan charge amounts the person was liable to pay before any payment of those amounts.

(8)

A reference in this section to a Schedule 11 or 12 to F(No. 2)A 2017 loan or quasi-loan is to—

(a)

a loan or quasi-loan (within the meaning of paragraph 2 of Schedule 11 to F(No. 2)A 2017) by reason of which a person is treated, under paragraph 1 of Schedule 11 to F(No. 2)A 2017, as taking a relevant step for the purposes of Part 7A of ITEPA 2003, or

(b)

a loan or quasi-loan (within the meaning of paragraph 2 of Schedule 12 to F(No. 2)A 2017) which is treated for the purposes of sections 23A to 23H of ITTOIA 2005 as a relevant benefit by reason of paragraph 1 of Schedule 12 to F(No. 2)A 2017.

(9)

In this section—

“the Commissioners” means the Commissioners for His Majesty’s Revenue and Customs;

“contract settlement” has the meaning given by section 25 of CRCA 2005;

“shadow director” has the meaning given by section 251 of the Companies Act 2006.