The loan charge is a UK tax that applies to loans that have been received by individuals or companies and treated as taxable income, but which have not been repaid by the time the tax return is due. The loan charge was introduced in 2017 as a way to counter the use of disguised remuneration schemes, which involve loans being given to individuals in place of salary or other forms of taxable income.

Under the loan charge, individuals and companies are required to pay tax on any outstanding loans that have not been repaid by the time the tax return is due. The tax is calculated at the highest marginal rate of income tax and is due in full on the date the tax return is due, even if the loan is still outstanding.

The loan charge has been controversial, with some individuals and groups arguing that it is unfair and retroactive and that it disproportionately affects those who have participated in disguised remuneration schemes. If you are concerned about the loan charge and how it may affect you, it is a good idea to seek advice from a tax professional or from HM Revenue and Customs (HMRC).