Taxation of loan relationships—what are loan relationships?
Taxation of loan relationships—what are loan relationships?

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Taxation of loan relationships—what are loan relationships?
  • Who falls within the loan relationships regime?
  • What types of transactions fall within the loan relationships regime?
  • Loans and debt instruments—actual loan relationships
  • Other kinds of money debts
  • Other arrangements regarded as equivalent to debt finance
  • Definition of loan relationship
  • Debt
  • Money debt
  • Transaction for the lending of money
  • More...

The loan relationships regime provides the rules for the taxation and relief of a company’s profits and losses from its ‘loan relationships’. The rules are principally found in Part 5 of the Corporation Tax Act 2009 (CTA 2009).

This Practice Note looks at the entities and the types of transactions and other arrangements that fall within the scope of the loan relationships regime.

For the computational rules which govern how profits and losses on loan relationships are calculated and brought into account for corporation tax purposes, see Practice Note: Taxation of loan relationships.

Who falls within the loan relationships regime?

The loan relationships rules apply to companies within the charge to corporation tax.

Entities within the regime therefore include:

  1. UK resident body corporates (and certain unincorporated associations)

  2. non-UK resident companies carrying on a trade in the UK through a permanent establishment to which profits and losses from a relevant loan relationship are attributable

  3. companies within the charge to corporation tax who are members of partnerships, and

  4. the trustees of an authorised unit trust in respect of income arising to those trustees (which are taxed as if they were UK resident companies for certain purposes), investment trust companies, venture capital trusts, open-ended investment companies (OEICs) and insurance companies. Note that special provisions apply to each of these types of entities which modify the application of the loan relationship regime. Rules

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