CTM61090 - Close companies: capital payments to settlors: temporary loans

Certain temporary loans or temporary loan repayments made by a close company connected with the settlement to a settlor or settlor鈥檚 spouse are taken out of the scope of ITTOIA/S641 and hence ITTOIA/S633 by ITTOIA/S642.

The type of loan that can be excluded is one made:

  • to the settlor or his or her spouse,
  • by the close company, or another close company, connected with the settlement, or
  • by the settlor or spouse to that or any other close company connected with the settlement.

To be excluded:

  • the whole of the loan must be repaid within twelve months of the date on which it is made, and,
  • the period for which loans are made must not exceed twelve months in any period of five years.

Repeated 鈥榯emporary鈥� loans will thus, in general, continue to be caught by Section 633 (subject to CTM61130).