Corporation Tax Act 2010 section 256

Meaning of "loan" and "interest"

Section 256 broadens the definitions of "loan" and "interest" for the purposes of the Community Investment Tax Relief rules, so that alternative finance arrangements (such as Sharia-compliant products) and their returns are treated in the same way as conventional loans and interest.

• The term "loan" is extended to include alternative finance arrangements, specifically purchase and resale arrangements, deposit arrangements, and profit share agency arrangements
• The term "interest" is extended to include the alternative finance return generated under those arrangements
• The definitions of these alternative finance arrangements and returns are drawn from the Corporation Tax Act 2009 (sections 503, 505, 506, 511, and 513)
• Additional interpretive rules in sections 257, 258, and 259 of this Act apply to each type of arrangement respectively, and must be read alongside these extended definitions