'Deeply worrying' number of people facing loan charge have expressed suicidal thoughts, MPs tell Government

The All-Party Parliamentary Loan Charge & Taxpayer Fairness Group (APPG) has written to Lucy Frazer, Financial Secretary to the Treasury, outlining their concerns about the “draconian” loan charge and calling for an open meeting where officials can be questioned about the policy.

The letter, which has been signed by the MPs Sammy Wilson, Greg Smith and Mohammad Yasin, invites Ms Frazer to attend a two-hour open question and answer session with the APPG about the loan charge.

The loan charge was designed to tackle tax avoidance schemes where individuals receive income in the form of loans that are not repaid to avoid income tax. The Government announced a review in 2019 after the policy left thousands of people on modest incomes with large and unexpected tax bills.

The Government revealed a package of changes to the loan charge in response to the review, but the APPG still believes the policy is flawed.

The APPG letter says there has been “huge concern” among MPs and peers about the loan charge, adding: “We note, with acute disappointment that you not only have failed to respond to the group of tax sector professionals who approached you calling for a new approach and a fair resolution, but that you instead asked HMRC to respond to them. The approach by this group of independent tax sector professionals was to you, as the responsible Minister, to politically intervene in what you are aware is both a deeply contentious issue and also one that has caused suicides. It therefore requires political leadership and intervention and proper engagement.”

The APPG has conducted a call for evidence from people facing the loan charge.

The letter states: “We are in the process of compiling this evidence and will share this with you, but already we can tell you that the situation people are in due to the loan charge is awful, with a deeply worrying number of people having expressed or expressing suicidal thoughts.”

A Government spokesperson said: “The loan charge was introduced to ensure those who used disguised remuneration tax avoidance schemes paid their fair share of income tax and national insurance contributions. It is only right that we continue to tackle these type of avoidance schemes as they deprive our public services of vital funding.

“HMRC has already published settlement terms for those who have used disguised remuneration schemes. We encourage anyone who is worried about paying the Loan Charge to contact HMRC so they can help. HMRC is committed to working with taxpayers to enter manageable payment plans to spread their tax liability and ensure that they are affordable.”

MPs from across the political divide have continued to raise concerns about the potential harm being inflicted on law-abiding people by the loan charge.

Ruth Cadbury, the Labour MP for Brentford and Isleworth, told the Commons: “We know that there are many, many thousands of nurses, social workers and other public sector workers who have been caught up in the loan charge.

“They took work via agencies that basically told them, Sign here or you don’t get the work’. Checking to see whether they would be liable for the loan charge was not an option.”

More than 140 Parliamentarians have signed an open letter to the Prime Minister and the Chancellor calling for a resolution to the loan charge.