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HMRC internal manual

Corporate Finance Manual

Deemed loan relationships: money debts: summary

‘Non-lending relationships’

CTA09/PT6/CH2 sets out the rules for ‘relevant non-lending relationships’. These are money debts, but they do not arise from the lending of money and hence do not come within the definition in Part 5. Chapter 2 taxes two types of such money debt:

  • those on which interest, exchange gains and losses and impairment losses arise; and
  • discounts.

Interest-bearing debts

The most common example of such debts is a trade debt. Interest and profits (but not losses) from the disposal of the right to receive interest, exchange gains and losses, and impairment losses on such debts are taxable under CTA09/S479 as loan relationship credits and debits.

The impairment losses to which Chapter 2 applies are what used to be taxed as bad and doubtful trade debts under ICTA88/S74(1)(j) for periods before 1 January 2005.


Discount received on a money debt is taxable under CTA09/S480 as loan relationship credits. The rule only applies to the creditor, not to the debtor, and does not apply to amounts brought into account as trade receipts. Before 16 March 2005, discounts were taxable for Corporation Tax purposes under Schedule D Case III.

The rules on money debts are explained in more detail at CFM41000.