The measure

Legislation is to be introduced in the Finance Bill to deny a corporation tax deduction where a loan to a participator in a closely held company (essentially a company with five or fewer shareholders) is released or written off. The effect of writing off or releasing the loan is to trigger an income receipt, akin to a dividend payment, in the hands of the participators. This treatment is to be retained, but the new rules deny the corporate debt rules.

Who will be affected?

Closely held companies who have made loans to participators that have been written off or released.

When?

The provisions will apply to loans released or written off on or after Budget Day.