Corporation Tax Act 2009 section 486A

Overview

Section 486A introduces the disguised interest rules, which bring certain returns that are economically equivalent to interest within the loan relationships tax regime.

• Returns that are economically equivalent to interest are taxed under the loan relationships rules in Part 5 of the Corporation Tax Act 2009
• The detailed definition of what constitutes disguised interest is set out in section 486B
• Three specific exclusions apply: where the return is already taxable, where there is no tax avoidance purpose, and where excluded shares are involved
• The effect is to prevent companies from structuring arrangements to produce interest-like returns while avoiding the loan relationships tax treatment