How do I reclaim s.455 tax on loans to participators? Which form do I use? Where can I find the link?
This is a freeview 'At a glance' guide to reclaiming s.455 tax paid on loans to particpators.
When a Close company makes a loan or advances money to a participator and it remains outstanding more than nine months after the company's year-end, the company may be liable to a tax charge under Section 455 CTA 2010.
This tax charge is calculated as a percentage of the value of the outstanding loan:
- 25% before April 2016.
- 32.5% April 2016 to April 2022.
- 33.75% April 2022 to April 2026.
- 35.75% April 2026 onwards.
HMRC provide an online claims facility that can be used by close companies to obtain a refund of s.455 tax paid when a loan to a participator has been repaid, released or written off.
- Relief cannot be reclaimed until 9 months and 1 day has passed since the end of the accounting period in which the loan was repaid (mirroring the s.455 payment due date).
- Where there are multiple loans and only a partial repayment is made you can specify which loans have been repaid (subject to the Anti-avoidance rules). If you do not the loans will be treated as repaid on a first in first out (FIFO) basis.
- The claim can be completed by:
- A tax agent, using their Agent Services Account.
- The company, via their Government Gateway Account.
- It may be possible to claim on the relevant Company Tax Return (CT600) if the relief is due at the time the return is sent in.
The other tax consequences, for both the company and participator, of a loan that is released or written off are considered in detail in our guides.
Useful guides on this topic
Close companies: Definitions & control
What is a Close company? What are the tax consequences? What is a Participator? What is meant by Control of company? What are the tests for Control?
Close company loans toolkit (loans to participators)
What is the Corporation Tax treatment when a close company makes a loan to a participator (director-shareholder)? How do the 'bed and breakfasting' rules work?
Directors' loan accounts: Toolkit
HM Revenue & Customs (HMRC) do a toolkit for advisers. This is our enhanced version with planning points.
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External links
HMRC Guidance: