![HMRC v M R Currell Ltd [2026] – Genuine Loan via EBT Not Taxable as Salary](https://apexaccountants.tax/wp-content/uploads/2026/05/EBT-loans.webp)
In HMRC v M R Currell Ltd [2026] EWCA Civ 445, the Court of Appeal held that an £800,000 payment routed through an Employee Benefit Trust (EBT) was a genuine loan, not taxable employment income, because it carried a real obligation to repay. In April 2026, the court confirmed that Mr Currell received a loan, not extra pay, so he did not gain taxable earnings from the transaction. This clarifies that simply using a trust to channel funds does not automatically turn money into a salary – the substance of the transaction matters.
Disguised remuneration (DR) rules have long targeted schemes that shift pay into loans or benefits via third parties. In 2011 the government enacted Part 7A of ITEPA 2003 to catch such schemes involving intermediaries. Later, the controversial Loan Charge (2019) aimed to tax old loan arrangements. However, under general law, a payment is only taxed as earnings if it arises “from the employment”. As HMRC’s own manuals note, a profit or payment “arose from something else” than employment if it did not truly come as a reward for services. In Currell’s case, the money was a loan – a debt Mr Currell had to pay back – not an additional salary.
Background: Disguised Remuneration & EBT Loans
Disguised Remuneration Rules (Part 7A ITEPA 2003):
Introduced in 2011 to target third-party schemes avoiding income tax. They tax “relevant steps” (like making a loan through a trust) as if they were paid.
Loan Charge (2019):
Further rules will tax old disguised remuneration loans. Importantly, changes after a 2025 review limit the charge to loans made on/after 9 Dec 2010.
General Tax Law:
Under s.62 ITEPA (formerly s.19 ICTA), only payments “from the employment” are earnings. Courts ask, ‘Did the benefit come in return for work or from some other source?’
Example: HMRC’s own guidance says that a gift (e.g., a wedding present) from an employer is not taxed because it’s not “from the employment” but from a personal occasion. By analogy, a genuine loan made to an employee – especially through a trust – may not be “from” the job and thus not automatically considered earnings.
Facts of the Currell Case
| Date | Event |
| Nov 2010 | Company Contribution: M R Currell Ltd (a small painting business) pays £800,000 into a newly created EBT. |
| Nov 2010 (same day) | Loan to Director: The EBT trustees immediately lend £800,000 to Mr M. Currell (a director) at 0% interest for 5 years, secured on the company shares he buys. |
| 2010 (shortly after) | Share Purchase: Mr Currell uses the loan to buy shares (A shares) from his wife. Mrs Currell then loans the money back to the Company. |
| 2011 onwards | Tax Challenge: HMRC investigates and assesses the £800k as if it were Mr Currell’s earnings, seeking income tax and NICs. |
The key points of the arrangement were that the loan was fully documented, secured by Mr Currell’s shareholding, and he clearly intended (and was able) to repay it. The First-tier Tribunal (FTT) initially treated the payment to the trust as taxable pay, essentially calling it a reward for Mr Currell’s services. On appeal, the Upper Tribunal (UT) found the opposite: the contribution to the EBT was made solely to enable the loan, and since the loan had a real repayment obligation, the payment was not considered earnings.
FTT (201X):
Viewed the £800k contribution (the “Payment”) as remuneration for Mr Currell’s work, relying on previous cases like RFC 2012 Plc v Advocate General for Scotland (“Rangers”) that held payments to a trust could be earnings when they were agreed upon as part of salary.
UT (2024):
Ruled that the FTT made an error. It held that the loan itself was genuine and repayable, so the contribution was not Mr Currell’s pay. The UT “remade” the decision in HMRC’s favour (legally speaking) and concluded that the £800k was not taxable as earnings because of the loan’s bona fide nature.
Court of Appeal Decision
The Court of Appeal (CA) upheld the Upper Tribunal. It firmly agreed that the loan was genuine and properly characterised. Key principles from the judgement include the following:
Characterisation Over Purpose:
The court stressed that the character of a payment must be determined before applying tax law. Money spent on employee benefits does not automatically become “earnings” simply because of the purpose. In Currell’s case, the money went into the trust and then became a loan. The CA emphasised that one must look at what the transaction actually was, not just at why it happened.
Genuine Loan ≠ Earnings:
A loan with a real promise to repay is not earnings. The court noted that an employee receiving a genuine loan with repayment terms is not getting a benefit worth money in the sense of pay. Instead, any fiscal “benefit” (like zero interest) is taxed under the special loan/beneficial loan charge rules, not as salary. As the CA aptly put it, “In truth, what Mr Currell got was the loan. This was not a case of diverting remuneration to the EBT.”
Read: Everything You Need to Know About Director’s Loan Write-Off and the Douglas Boulton Case
Distinguishing Rangers:
In Rangers (the 2017 Supreme Court case), it was already common ground that the monies were remuneration; the only question was whether a trust could receive them. Here, by contrast, the very nature of the payment was in dispute. The CA highlighted a “fundamental distinction”: unlike Rangers, in Currell it was not agreed the money was due as salary in the first place. Because the loan was secured and had to be repaid, the Court found it was incorrect to equate it with Mr Currell’s pay.
Limited Circumstances for Taxing Loans:
The Court noted that only in limited cases – for example, a sham loan or arrangement – could a loan be treated as earnings. On Currell’s facts, there was no sham. The suggestion that a borrower’s control over a lender (e.g., via share ownership) could turn the loan into pay was dismissed; no legal authority supported that idea.
Caution Against Overreach:
In its concluding remarks, the CA warned that HMRC’s broad approach could have unintended consequences. It gave examples: if every loan through a third party were taxed as pay, ordinary loans (like directors withdrawing loan account balances or loan season-ticket schemes via payroll) might wrongly be caught. This “close inspection of the trees” could miss the bigger picture. The court thus signalled that normal commercial loans should not be swept up as disguised salaries.
In summary, the Court of Appeal agreed that the Upper Tribunal’s conclusion “was the only one that could have been reached” and expressly adopted its view that the £800k was not part of Mr Currell’s earnings.
Practical Implications for Businesses and Advisers
The Currell ruling offers important guidance for businesses, directors and accountants dealing with trust-based benefits.
Genuine loans must be clear:
Any loan from a company (even via a trust) should be well-documented, with a realistic repayment schedule and security. The court noted Mr Currell’s loan was properly secured on his shares and he had independent means to repay them. Companies should “confirm loans from EBTs/trusts are properly documented, secured, and carry a realistic repayment obligation”.
Characterise the transaction:
Focus on the substance over the formal route. If an employee receives money that they must repay, it is more logically a loan than extra salary. As HMRC’s rules (and this case) emphasise, one must decide if the benefit came “from the employment”. In practice, explain in writing that the payment is a loan for a commercial purpose (e.g., a share purchase), not a payment for work.
Trustees’ independence:
Ensure that trustees genuinely make trust decisions, rather than merely rubber-stamping them as the company or director would. The CA pointed to the importance of true trustee control. If trustees simply do what the employer directs, HMRC may argue the trust is a sham conduit.
Use Currell in disputes:
If HMRC challenges a loan from EBT as disguised remuneration, this case is strong authority (for pre-2011 schemes) to insist the loan is taxed as such, not as salary. Advisers should request that HMRC confirm the character of the payment (loan vs remuneration) and cite Currell’s reasoning on s.62 analysis.
Beware modern DR rules:
Currell was a pre-2011 loan (Part 7A came into force in Oct 2011) and a pre-loan charge. After 2011, the law expanded to treat many third-party loans as income immediately. The Court acknowledged that Parliament later closed this gap. So do not assume that post-2011 or Loan Charge-era loans can avoid tax; new anti-avoidance rules will often apply. In short, Currell vindicates older arrangements, but “for post-2011 structures, Currell does not provide a free pass.”
Review legacy schemes:
This decision is an opportunity to re-check any old EBT or loan arrangements. Where a loan was truly made and intended to be repaid (even if it was tax-advantaged), Currell suggests it was not income at the time. Conversely, any sham or purely circular schemes should be unwound or settled.
Seek expert advice:
The line between a legitimate loan and a disguised salary can be fine. Specialist tax advice (or even HMRC clearance) is prudent for complex arrangements. The Currell judgement itself recommends getting professional opinions and structuring “defensively” under Part 7A rules.
How We Help
As chartered accountants and tax specialists, Apex Accountants can help you navigate EBT schemes and employee tax:
- Tax planning & compliance: We advise on structuring loans, share purchases or benefits so they meet legal requirements and minimise tax risk.
- Disguised remuneration & EBT advice: Our team stays up to date on cases like Currell. We can review any trust-based arrangements and ensure they pass the correct legal tests.
- HMRC dispute support: If you face an enquiry or need to appeal an HMRC decision, we can help develop your case (for example, using Currell to argue your loan was not taxable earnings).
- Loan Charge guidance: We assist clients with historic loan schemes to check if and how the Loan Charge or new rules apply.
- Tailored accounting services: From company accounts to payroll taxes and beyond, we provide practical support to UK businesses of all sizes.
With our expertise, you’ll get clear, practical advice grounded in the latest laws and court decisions. We aim to protect your interests and help you stay compliant without paying more tax than necessary.
Conclusion
The HMRC v M R Currell Ltd [2026] case is a reminder to look at the true nature of payments. A bona fide loan – even one routed through an EBT – should be treated as a loan for tax purposes, not as hidden earnings. This means thorough documentation and honest substance are vital. While later legislation (Part 7A, Loan Charge) has tightened the rules, Currell restores balance for older arrangements. It shows that legitimate trust arrangements with real loans won’t automatically trigger income tax just because a trust is involved. For specific situations, always seek tailored advice.
Contact Apex Accountants for expert support on employment taxes, EBT schemes and any HMRC issues. We’ll help you understand how cases like HMRC v Currell Ltd may affect your affairs and ensure you comply with tax law.
FAQs About HMRC v M R Currell Ltd [2026]
What was the main point of the Currell judgement?
The Court of Appeal confirmed that when a company’s contribution to a trust is used to fund a loan to an employee, this loan – if genuine and repayable – is not automatically taxable as earnings. In Currell’s case, the £800k he received was treated as a loan (with a real obligation to repay), not as salary.
How is this different from the Rangers’ case?
Rangers (2017) held that if an employee contracts to have part of their salary paid to a trust, it is taxable when it enters the trust. In Currell, by contrast, the court found that the parties disputed whether any salary was ever deferred; here, the arrangement was purely a loan. The Court emphasized that, unlike Rangers, it did not agree that Mr Currell had earned this money as pay.
Does this mean EBT loans are tax-free?
Not always. Currell specifically involved a loan made in 2010, before new anti-avoidance rules (Part 7A ITEPA, Loan Charge) took effect. The Court’s logic focused on that time. Today, many loans via trusts fall under strict DR legislation. However, Currell shows that if a loan was genuinely commercial and was entered into before 2011, it may not have been considered “earnings,” even if it was routed through a trust.
What should employers do now?
Companies should ensure any employee loans (direct or through trusts) are bona fide: documented, secured, and repaid. If using an EBT or similar vehicle, trustees must act independently. In case of HMRC enquiries, use the Currell case to argue that the loan should be taxed under the loan rules, not as salary, by highlighting the legal distinction. Always keep clear records of the purpose (e.g., a share purchase) to show the commercial rationale.
Will this case affect employees and tax appeals?
Yes. Individuals or employers who took loans from trusts (especially before 2011) can reference this ruling. It may overturn earlier assumptions that “trust = tax avoidance”. For appeals, lawyers and accountants will likely cite Currell when challenging HMRC assessments on genuine loans.
