Transfer for FREE Between ContractorUmbrella and Dolan Accountancy

Find Out More

Loan Scheme Companies

Have you come across one of these schemes advertising in excess of 85% retention on your income?

Loan scheme companies work by paying you a small salary and loan you the balance of income (less their usually high fees).

The problem is that as soon as the loan is written off it becomes taxable in full. If the loan is not written off, then you obviously still owe the money to the scheme provider – this money can be called in at any time and at any point in the future.

A number of contractors signed up to this type of scheme in good faith after promises that, when they left the loan would be written off. The problem is, now these people are receiving letters from the scheme provider reclaiming the debt.

There is also the risk of being hit twice for the debt. The ‘loan’ is a benefit in kind (BIK) and if it’s not declared on your tax return as income, you also potentially face a huge tax bill and fine, on top of repaying back the original loan.

Contractors that have got caught up in these schemes are flocking to a popular contractor forum expressing their worries. One contractor wrote Please add one more frustrated, sick and naive con to the list. I had a letter arrive Thursday and it knocked me sick. Stressed about it all day Friday only to find another when I got home. Not the most settled of weekends.”

These schemes are extremely misleading and you will end up worse off in one way or another. If you have been recommended to join one of these schemes - our advice is to avoid at all costs!

If you have any questions after reading this page or would just like to make a general enquiry, please contact a member of our team on 01206 713680 or email us at

Read our BN66 page to find out more about offshore schemes and whether it really is possible to take home 100% of your income?