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HMRC internal manual

Corporate Finance Manual

Loan relationships: a short guide: examples of loan relationships

Examples of loan relationships

The term embraces most debts, from simple loans to company securities. Subject to certain exclusions, the following will be loan relationships.

  • overdrafts, mortgages, bank loans and other borrowings
  • bank deposits and building society shares and deposits
  • inter-company and directors’ loan accounts where there is lending of money (but not where these accounts simply reflect the supply of goods and services)
  • company bonds, loan notes and debentures
  • eurobonds
  • bills of exchange
  • commercial paper
  • certificates of deposit
  • gilts and government stock
  • funding bonds.

Distributions are not loan relationships

CTA09/S465 explicitly excludes amounts treated as distributions from being loan relationships (except for credits that result from tax avoidance arrangements). Distributions are not therefore prevented from being taxed under other corporation tax rules.

Other examples that are not loan relationships

The following do not arise from the lending of money and will not be loan relationships.

  • ordinary and preference shares
  • debts for the supply of goods and services, or arising from leasing or hire purchase arrangements
  • rents
  • payments made as a result of guaranteeing another person’s liabilities.