Loans to participators

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

This guidance note deals with the rules regarding payment of tax, and making claims for repayment of tax on loans to participators.

For a summary of other tax implications of close company status, see the Close companies ― overview guidance note.

Making of loans to participators

For loans or advances made by a close company, a tax charge of 33.75% will apply if the loan was made otherwise than in the ordinary course of a business carried on by it, which includes the lending of money to any of the following:

•
a person who is a ‘participator’ in the company or is an ‘associate’ of a participator
•
a trust in which a participator or their associate is trustee or potential beneficiary, or
•
an LLP or other partnership whose membership includes a participator or their associate ― this will catch, for instance, genuine commercial structures such as loans from related close companies to property development LLPs to fund new developments

CTA 2010, s 455

‘Participator’ is defined in the Definition of a close company guidance

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Popular Articles

Employment Tax

Incentives, awards and prizes

Incentives, awards and prizesIntroduction ― incentives, awards and prizesEmployers may use a variety of methods to reward and encourage employees in their work. These are commonly known as incentives, awards or prizes. For the purposes of this note, the term ‘award’ will be used to cover all

14 Jul 2020 11:57 | Produced by Tolley Read more

Corporation Tax

What are connected companies for loan relationship purposes ― practical approach

What are connected companies for loan relationship purposes ― practical approachBrief overview of the rulesThe loan relationships legislation applies to any ‘money debt’ arising from the lending of money entered into by a company, either as a lender or borrower. The rules are contained in CTA 2009,

20 Apr 2021 16:00 | Produced by Tolley Read more

Corporation Tax

Overseas property businesses for companies

Overseas property businesses for companiesOverviewReal estate income is generally taxed where the property is located; the UK tax treaties generally allow the jurisdiction where the land is located to tax income from the land.Therefore, a UK company with overseas property may be subject to tax in

14 Jul 2020 12:22 | Produced by Tolley in association with Rob Durrant-Walker of Crane Dale Tax, part of AMS Group Read more

��Ƶ