The vast majority of companies will have loan relationships and so will need to consider how they are taxed under the loan relationship rules. There are also specific provisions dealing with relevant non-lending relationships and other deemed loan relationships.

Companies are generally taxable on the debits and credits that are recognised in their statutory accounts in respect of their loan relationships and related transactions. The legislation is specific about the debits and credits that are taxable, and the basis of the accounts that they are drawn from.

Debits and credits arising from a company’s loan relationships are subject to tax either as part of the company’s trading profits (or losses) or as non-trading profits (or losses). In order to determine the tax treatment of its loan relationships, it is first necessary for a company to establish the purpose of the loan. It will then go on to calculate the relevant debits and credits for the loan relationships.

This guidance note deals mainly with the computational and charging provisions in CTA 2009, ss 306–334 (Part 5, Chapter