Jurisdiction(s):
United Kingdom

Key definition

Loan relationships regime definition

What does Loan relationships regime mean? Describes the corporation tax rules that bring together a company’s interest, foreign exchange movements and other profits or losses on debt and related financial instruments, so that the accounting credits and debits are taxed or relieved in a coherent way. In UK practice, the loan relationships regime is the statutory code in Part 5 Corporation Tax Act 2009 (and related provisions). It requires companies to bring into account amounts arising from money debts, including interest, discounts, premiums, impairments, releases and exchange gains and losses, generally following UK GAAP or IFRS measurement (amortised cost or fair value), subject to...

UK corporation tax: loan relationships—GAAP framework, IFRS 9/FRS 102 recognition and measurement, hedging, compound and hybrid instruments, impairment, and amortised cost versus fair value

Published by a LexisNexis Tax expert

Practice notes

A core tenet of the Loan relationships regime is that a company’s borrowing, Lending and other corporate debt are taxed by reference to the profits and losses recorded in its accounts. Put differently, the way a loan relationship is recognised and measured under accounting standards will, in most cases, dictate the debits and credits taken into account for corporation tax under the loan relationships code. Although the Rules depart from this approach in a number of specific situations, the strong alignment of tax with the financial statements means it is essential to understand the accounting treatment of corporate finance arrangements in order to operate the computational provisions of the Loan relationships rules. Consequently, applying tax computations correctly requires familiarity with how such instruments are accounted for...

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Web page updated on 22/05/2026

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