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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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TCGA92/Sch4B - What is trustee borrowing?


The trustees are treated as borrowing if:

  • money is lent to them
  • an asset is lent to them
  • an asset is transferred to them and the trustees assume a contractual obligation to return or to transfer the asset or any other asset to any person.

The obligation to return or transfer the asset may be absolute or conditional but it must be contractual and not merely fiduciary. An example of this type of transaction would be stock borrowed under a stock lending agreement.

All three types of borrowing are called ‘loan obligations’.

It is doesn’t matter if the borrowing is from a company controlled by the trustees so that the trustees are borrowing funds they control. This is still a loan obligation as are loans from the beneficiaries.

Trustee borrowing includes informal overdrafts as well as formal loans. A genuine delay in paying a bill is not treated as borrowing for the purposes of TCGA92/Sch4B.

The grant of a lease to the trustees is not the lending of an asset. The assignment of an existing lease to the trustees for a time shorter than the period of the lease so that it reverts to the original leaseholder would be trustee borrowing.