Part 4Savings and investment income
Chapter 6Release of loan to participator in close company
418Relief where borrowers liable as settlors
1
Relief is given under this section if the person to whom the loan or advance was made—
a
is liable for the tax year for income tax on a sum in respect of it under Chapter 5 of Part 5 as a result of section 633 (capital sums paid to settlor by trustees of settlement), or
b
has been so liable for any previous tax year.
2
If the total amount previously charged (see subsection (4)) equals or exceeds the total amount released (see subsection (6)), tax is not charged under this Chapter.
3
If the total amount released exceeds the total amount previously charged, tax is charged under this Chapter on the excessF2....
4
In this section “the total amount previously charged” means the total of—
a
the sums included in the person's income under section 633 in respect of the loan or advance for the tax year or for previous tax years, and
b
the amounts charged under this Chapter in respect of the loan or advance for previous tax years.
5
For the purposes of subsection (4)(a), section 640(1) (which requires the grossing up of the sums treated as paid to the settlor by reference to the F1trust rate) is ignored.
6
In this section “the total amount released” means the total amount released or written off in respect of the loan or advance in the tax year and previous tax years.