Loans from shareholders

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Loans from shareholders
  • ‘Late interest’ rules
  • Withholding tax requirement
  • Transfer pricing
  • Income tax and NICs
  • Relief for irrecoverable loans to traders

This guidance note provides an overview of the tax implications to consider when loans are made to companies by their shareholders and provides links to other guidance notes setting out more detail on the various rules.

‘Late interest’ rules

If a close company is charged interest on certain loans, a set of anti-avoidance provisions known as the 'late interest' rules may apply. This means that if the interest on the loan is accrued but not paid over within 12 months following the year end, it is only allowable for corporation tax purposes when it actually paid, rather than when it is accrued. For more information, see the Connected party relationships - late interest guidance note. It should be noted that these rules have been repealed by FA 2015, s 25, which applies to loans entered into on or after 3 December 2014. For loans agreed prior to this date, accrued interest will continue to be subject to the late interest provisions until 1 January 2016. Further details on

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