Move hailed by Loan Charge Action Group as a hard-earned result following years of campaigning
The government has committed to an independent review of the Loan Charge scandal – a development hailed as “momentous” by the Loan Charge Action Group.
The commitment was published in the Autumn Budget policy document, shortly following the Chancellor’s speech on Wednesday 30th October, with further details about the review expected to be confirmed “in due course”.
As reported by the Telegraph, around 60,000 contractors were issued with tax bills following the introduction of the Loan Charge in 2019, with 10 suicides linked to what the Telegraph describes as its “bungled” introduction.
The government’s intention to commission an independent review is likely to be widely welcomed by many across the self-employed and contracting sectors, not least those affected by the scandal.
Loan Charge and umbrella sector in Labour’s sights
Introduced in 2019, the Loan Charge was designed as a tax recovery mechanism to recover tax revenue from so-called ‘disguised remuneration schemes’.
These schemes were widely marketed or promoted as tax-compliant. Typically, workers were paid their wages or assignment fees in the form of a non-repayable loan, which would not attract income tax or national insurance payments.
HMRC has since designated these schemes as tax avoidance, and introduced the Loan Charge to recover unpaid taxes on these fees or wages.
However, with all income treated as if it was earned in a single tax year, many contractors and flexible workers were issued unpayable tax bills – some with liabilities into the hundreds of thousands of pounds.
The Labour government seems to be aware of this and also announced plans to crack down on tax avoidance in the umbrella sector at the Autumn Budget. It is proposing to do this by making other parties in the contracting and recruitment supply chain liable for non-compliance, effective from April 2026.
Review must investigate “the whole issue”, says Loan Charge Action Group
Speaking to Sky News, Steve Packham – a spokesperson for the Loan Charge Action Group – welcomed the announcement, but warned that justice could be a “long way” off.
“It is hugely positive that the Chancellor, Rachel Reeves, has made good on her promise to commission a fresh, independent, review of the Loan Charge.
“We thank her and James Murray [MP] for this and for actually listening to those whose lives have, and are, being ruined by the Loan Charge scandal”, he added.
Packham also called for a “genuinely independent” review that looks “at the whole issue, the role of IR35 legislation, the entire contractor supply chain and the misconduct and failures of HMRC”.
He suggested that any “related HMRC activity” is paused in the meantime, “to allow for the review to be established and to then properly examine the whole scandal, leading to a fair and final resolution for the thousands of families affected”.
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