How to reclaim s.455 tax paid on loans to participators

How do I reclaim s.455 tax on loans to participators? Which form do I use? Where can I find the link?

This is a freeview 'At a glance' guide to reclaiming s.455 tax paid on loans to particpators.

When a Close company makes a loan or advances money to a participator and it remains outstanding more than nine months after the company's year-end, the company may be liable to a tax charge under Section 455 CTA 2010.

This tax charge is calculated as a percentage of the value of the outstanding loan: 

• 25% before April 2016.
• 32.5% April 2016 to April 2022.
• 33.75% April 2022 onwards.

HMRC provide an online claims facility that can be used by close companies to obtain a refund of s.455 tax paid when a loan to a participatory has been repaid, released or written off.

• Relief cannot be reclaimed until 9 months and 1 day has passed since the end of the accounting period in which the loan was repaid (mirroring the s.455 payment due date).
• Where there are multiple loans and only a partial repayment is made you can specify which loans have been repaid (subject to the Anti-avoidance rules). If you do not the loans will be treated as repaid on a first in first out (FIFO) basis.
• The claim can be completed by:
  • A tax agent, using their Agent Services Account.
  • The company, via their Government Gateway Account. 

The other tax consequences, for both the company and participator, of a loan that is released or written off are considered in detail in our guides.

Useful guides on this topic

Close companies: Definitions & control
What is a Close company? What are the tax consequences? What is a Participator? What is meant by Control of company? What are the tests for Control?

Close company loans toolkit (loans to participators)
What is the Corporation Tax treatment when a close company makes a loan to a participator (director-shareholder)? How do the 'bed and breakfasting' rules work?

Directors' loan accounts: Toolkit
HM Revenue & Customs (HMRC) do a toolkit for advisers. This is our enhanced version with planning points. 

Unlawful, illegal or ultra vires dividends
Is there a tax charge on an unlawful/illegal or ultra vires dividend?

Tax planning for directors
Editor's choice: some of our favourite tax guides, toolkits & checklists for directors.

External link

HMRC Guidance: Reclaim tax paid by close companies on loans to participators (L2P)