This is a freeview 'At a glance' guide to reclaiming s.455 tax paid on loans to participators.

Corporation Tax: reclaim tax paid by close companies on loans to participators (L2P). 

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 of 32.5% (25% before April 2016) of the value of the outstanding loan under section 455 CTA 2010.

HMRC provide both postal and online forms 'L2P' that can be used by close companies to obtain a refund of s.455 tax paid when a loan has been repaid, released or written off.

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

Directors' loan accounts: Toolkit
HM Revenue & Customs (HMRC) do a toolkit for advisers. This is our enhanced version with planning points. 

Close company loans toolkit (loans to participators)
This guide takes a detailed look at the Corporation Tax treatment when a close company makes a loan to a participator (director-shareholder). It also provides links to our guides for individuals on the making of loans to companies.

Unlawful, illegal or ultra vires dividends
Is there a tax charge on an unlawful/illegal or ultra vires dividend?

Tax planning for directors
Editor's choice: some of our favourite tax guides, toolkits & checklists for directors.

External link

HMRC: Form L2P


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