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FA96/S81

This guidance describes the capital gains aspects of the regime for Loan Relationships for companies from 1 April 1996 until the first accounting period to start on or after 1 October 2002. For periods beginning on or after 1 October 2002 see CG54100+

Broadly speaking, a company has a loan relationship wherever it is a party (either as a creditor, or a debtor) to a debt which

• arose from a transaction for the lending of money, and
• is a `money debtâ€�, defined as a debt which falls to be settled either by the payment of money, or by a debt which is itself a money debt.

For these purposes, `money� includes foreign currency. Where an instrument is issued to represent security for, or the rights of a creditor over, a money debt, that debt may be treated as a debt arising from a transaction for the lending of money.

Further detail on the meaning of loan relationship is given at CT12100+.

Where profits or losses from loan relationships are subject to income treatment, they are specifically exempted from the capital gains charge by treating them as qualifying corporate bonds (QCBs). »Ê¹ÚÌåÓýapp previous rules for deciding whether a debt held by a company is a QCB, at CG53700+, ceased to apply from 31 March 1996. From 1 April 1996, for the purposes of Corporation Tax, only debts which are loan relationships can be QCBs, as a result of the new TCGA92/S117 (A1). However, some categories of loan relationship are not treated as QCBs, see CG54020+.