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 under section 455 CTA 2010.

This tax charge is calculated as a percentage of the value of the outstanding loan: 

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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