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

Premiums on the grant or surrender of a lease

Premiums on the grant or surrender of a leasePremiums on the grant of a lease ― outlineWhen a property investor grants a lease, potentially this could be done on the basis that the tenant pays a premium for the initial grant of the lease, in addition to also paying rent over the term of the lease.

14 Jul 2020 12:58 | Produced by Tolley in association with Rob Durrant-Walker of Crane Dale Tax Read more

Owner-Managed Businesses

First year allowances

First year allowancesFirst year allowances (FYAs) are available on the following items:•first-year relief on qualifying new main rate plant and machinery (at 100%, which is described by HMRC as ‘full expensing’) and special rate assets (at 50%) from 1 April 2023 (companies only). These FYAs were

14 Jul 2020 11:41 | Produced by Tolley Read more

Trusts and Inheritance Tax

Bare trusts ― income tax and CGT

Bare trusts ― income tax and CGTThis guidance note explains how trustees of bare trusts are treated for income tax and capital gains purposes. Although a bare trust is, in equity, a type of trust, for both income tax and capital gains tax purposes its existence is transparent. This means that no tax

14 Jul 2020 15:34 | Produced by Tolley Read more

UU��ֱ��