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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:

1. •

   a person who is a ‘participator’ in the company or is an ‘associate’ of a participator

2. •

   a trust in which a participator or their associate is trustee or potential beneficiary, or

3. •

   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 of a close company guidance