LOANS FROM CLOSE COMPANIES TO THEIR PARTICIPATOR
Changes to S455 CTA 2010 – Charge payable by Company.
A S455 CTA 2010 charge arises when a company makes a loan to an individual who is a shareholder of the close company or to one of his associates. The charge is 25% of the loan and is payable 9 months and 1 day from the end of the accounting period in which it was made.
If the loan is repaid within 9 months from the end of the accounting period in which it was made, the charge is not payable.
If it is repaid later the Company needs to make a claim to have the charge reimbursed by HM Revenue & Customs.
The amendments introduced by the FA 2013 will impose this charge to certain arrangements which were not caught previously (because they included advances not made to individuals or not made of money) and will apply from 20 March 2013. These arrangements include:-
1. Any loans made to a Trust (Company shares are held in a Trust) or a Mixed Partnership (such as one where one of the partners and shareholder is a Limited Liability Partnership).
2. Certain transfers of value to shareholders which do not include monetary loans or advances.
3 Bed & Breakfasting:which means repaying the loan before the S455 due date and withdrawing further monies after that date.
If you require advice or would like us to review your Director’s/shareholder’s loan account please give us a call.