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HMRC internal manual

Company Taxation Manual

From
HM Revenue & Customs
Updated
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ACT: tax credit & FA93: loan released or written off

Where a loan within ICTA88/S419 is released or written off, ICTA88/S421 provides that the person to whom the loan was made is to have an amount included in his or her total income.

Prior to 1993-94 the amount released or written off was treated as a net amount of income received after deduction of IT at the basic rate. From 1993-94 it was treated as a net amount of income received after deduction of IT at the lower rate. From 6 April 1999, following the abolition of ACT, it is treated as if it were income chargeable under Schedule F which has been received after deduction of IT at the Schedule F ordinary rate.

This keeps the treatment in line with that applied to dividends (FA93/S77 (4), see also CTM61630).