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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
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Close companies: loans to participators: indirect loans: total income

CTA10/S459 (3) (b)

A payment, transfer, release etc, arising from an arrangement described in CTM61550 may be included in the total income of the recipient of the payment.

When the amount included in that person’s total income is more than or equal to the amount of the loan or advance, CTA10/S459 will not apply.

This may happen, for example, where:

  • a payment to the recipient is treated as his/her income for IT purposes (for example, as a distribution within CTA10/S1000 (1) B or CTA10/S1064, or
  • a loan to the recipient falls within the provisions of ITTOIA05/S633

The ‘total income’ of an individual is defined in ITA07/S23 as the sum of the amounts of income on which the taxpayer is charged to income tax for the tax year. Broadly speaking it consists of earned and investment (or unearned) income. It does not include anything on which capital gains tax is or would be chargeable.