Jurisdiction(s):
United Kingdom

Related legal acts

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...

CTA 2009 loan relationships: connected companies - impairments, debt releases, deemed releases, debt-for-equity swaps, insolvency exceptions and anti-avoidance

Published by a LexisNexis Tax expert

Practice notes

Under the loan relationships regime, a key tenet is that a company must recognise profits and losses on its loan relationships for corporation tax in accordance with the accounting treatment applied to those relationships, provided that treatment complies with GAAP. For further detail on the overarching rules for calculating and bringing into account profits and losses on loan relationships for corporation tax, see Practice Note: Loan relationships—the tax main rules.

There are, however, circumstances in which the loan relationships code requires the tax position to diverge from the profit or loss shown in the accounts. This can arise where a financial instrument within the loan relationships rules:

becomes impaired, or
is released (wholly or partly)

In these events, the statutory position can differ from the accounting outcome shown in the profit and loss.

Importantly, any such departure from the accounts only applies where the company either accounts for a loan relationship using the amortised cost basis, or is obliged to apply the amortised cost basis when computing its corporation tax liability...

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Web page updated on 22/05/2026

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