Income Tax (Trading and Other Income) Act 2005 section 639

Loans to participators in close companies

Section 639 prevents a double tax charge where a loan from a close company to a participator has already been taxed under the release of loan provisions in Chapter 6 of Part 4, and would also be caught by the settlements legislation.

• Applies where an amount relating to a loan or advance from a close company has already been included in a person's income under the release of loan rules in Chapter 6 of Part 4
• Prevents the same loan or advance from being taxed again under the settlements code (section 633)
• Any subsequent charge under section 633 on the same loan or advance is reduced by the amount already taxed under Chapter 6 of Part 4
• Ensures that where both charging provisions could apply, the taxpayer is not subject to a double income tax charge on the same underlying loan or advance