Income Tax (Earnings and Pensions) Act 2003 section 554RA

Exclusions: relevant repayments

Section 554RA ensures that straightforward repayments of loan principal are not treated as taxable relevant steps under the disguised remuneration rules in Part 7A, provided certain conditions are met.

• The exclusion applies to repayments of principal on loans made on or after 6 April 1999, where the repayment occurs on or after 9 December 2010.
• The exclusion only covers the Part 7A charge that would otherwise arise from the repayment itself — it does not shield any subsequent actions or steps from a Part 7A charge.
• The repayment sum must continue to be held on the same basis as the original repayment right was held immediately before the repayment was received.
• The exclusion is denied where there is any direct or indirect connection between the repayment and a tax avoidance arrangement, other than the arrangement under which the original loan was made.