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% (32.5% before 2022/23) 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

FA 2022, s 4

‘Participator’ is defined in the Definition

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL

Popular Articles

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

Research and development (R&D) relief ― overview

Research and development (R&D) relief ― overviewThis guidance note provides an overview of the research and development (R&D) tax reliefs for companies.See the Research and development tax relief summary diagram which summarises the R&D tax relief.See also Simon’s Taxes D1.401.For a factsheet which

14 Jul 2020 12:22 | Produced by Tolley in association with Will Sweeney Read more

Corporation Tax

Withholding tax

Withholding taxIntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeUK withholding tax may be reduced under the provisions of a double tax treaty (DTT). Prior to 1 June 2021, payments of interest and royalties made to EU resident associated companies were

14 Jul 2020 14:01 | Produced by Tolley Read more

��˾��ҹ��