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HMRC internal manual

Corporate Finance Manual

HM Revenue & Customs
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Loan relationships: taxing and relieving provisions: overview


The method of taxing loan relationships is set out in CTA09/PT5/CH1.

A company is taxed on its ‘credits’ and ‘debits’ arising from its loan relationships and related transactions. CFM33000 explains how the ‘credits’ and ‘debits’ are computed.

Trading credits and debits

The debits and credits from a loan relationship to which it is party for the purposes of a trade are brought into account in calculating the profits of the trade. This means that they are treated as receipts and expenses of the trade for the accounting period in which they arise.

Non-trading credits and debits

The debits and credits from non-trading loan relationships are aggregated. A net non-trading profit from loan relationships is taxed as part of the company’s income for the accounting period in which it arises.

A net non-trading deficit is dealt with in accordance with CTA09/PT5/CH16. Such deficits are carried forward against non-trading profits of later accounting periods, or, subject to a claim, may be set off against profits of any kind of the loss period, or against non-trading credits arising in a period ending within the previous 12 months, or surrendered as group relief.