Jurisdiction(s):
United Kingdom

Key definition

Loan definition

What does Loan mean? In legal practice, a loan is an advance of money by a lender to a borrower with a binding obligation to repay the principal sum, usually with interest, either on demand or at agreed dates during a term. Loans may be secured or unsecured and may be documented as a loan or facility agreement, promissory note or deed. Repayment may be amortising or bullet. Interest and fees (for example, arrangement, commitment or default interest) are commonly payable but are not essential to a loan’s validity. The term is a descriptive expression used across commercial, consumer and corporate finance; specific statutes...

UK loan agreements: treaty lenders—withholding tax relief conditions, beneficial ownership and PPT, DTTP, and borrower-focused LMA drafting to contain gross-up exposure

Published by a LexisNexis Tax expert

Practice notes

This Practice Note:

sets out the principal conditions that must be met for a non-UK lender to qualify for relief from UK withholding tax on interest paid under an applicable double tax treaty with the UK, drawing particular attention to the potential difficulty posed by the beneficial ownership test, and
offers drafting ideas to reinforce a borrower's position

As noted in:

Practice Note: Tax considerations on a loan agreement—the tax gross up clause, and
Checklist: Reviewing a loan with a view to alleviating UK withholding tax risk—checklist

withholding tax is a central issue for a loan. The possibility that UK withholding tax could apply to an interest payment—and therefore that a borrower may need to gross up that payment for the withholding—heightens where the lender is not UK tax resident. Some lenders that are not UK tax resident are based in a jurisdiction with a double tax treaty with the UK, under which certain lenders may secure a full exemption from UK withholding tax. In standard UK loan agreements, such lenders are described as treaty lenders...

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Web page updated on 21/05/2026

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