Jurisdiction(s):
United Kingdom

Key definition

Loans definition

What does Loans mean? Loans are agreements to advance money on terms of repayment, usually with interest. In pensions practice, this covers any arrangement where occupational pension scheme assets are lent. In Great Britain, legislation defines “employer-related investments” and strictly restricts them: section 40 of the Pensions Act 1995 (mirrored in Northern Ireland legislation) and the Occupational Pension Schemes (Investment) Regulations 2005 prohibit loans to the sponsoring employer or to persons connected with, or associated with, the employer, and ban giving guarantees or security for the employer’s obligations. Other employer-related investments (such as employer shares or securities) are subject to a...

UK LMA investment grade facilities: tax credit clause—purpose, limits, borrower‑friendly drafting (treaty lenders) and FATCA treatment

Published by a LexisNexis Tax expert

Practice notes

This Practice Note:

explains:
- the role of the tax credit clause commonly included in a loan agreement; and
- that the typical wording of this clause is lender‑friendly, which in turn restricts the borrower’s ability to benefit; and
provides drafting ideas to help a borrower secure the benefit of any tax refund or rebate available from a treaty lender.

In the context of syndicated Loans to corporate borrowers, it is usual to adopt one of the Loan Market Association (LMA) model loan facility agreements, each of which:

contains a standard tax credit clause;
is drafted in a manner that is favourable to lenders; and
assumes the Relevant tax is UK Withholding Tax—so it is essential to identify which jurisdiction’s withholding tax applies and, where it is not the UK regime, to amend the agreement accordingly.

The LMA’s model loan agreements are accessible to members on the LMA website (www.lma.eu.com)...

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Web page updated on 21/05/2026

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