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TAXguide 09/17 - FRS 102: loans at non-market rates

Technical release

Published: 07 Apr 2017 Updated: 16 Aug 2017 Update History

This TAXguide considers the tax treatment of loans at non-market rates of interest to companies. This follows changes to the accounting rules introduced in FRS 102 (The Financial Reporting Standard applicable in the UK and Republic of Ireland), which apply to accounting periods beginning on or after 1 January 2015 (1 January 2016 for small entities), and the impact of changes to the loan relationship rules which generally come into effect from accounting periods commencing on or after 1 January 2016. Read a summary here; Tax Faculty members can download the full guide.

Edited by Sharon Cooke, Director SWAT UK Ltd, this TAXguide on the treatment of non-market rate intercompany loans and loans from individuals (who may be directors and/or shareholders) has been written by Tax Faculty volunteers Androulla Soteri and Nicola Mandale.

Intercompany loans at non-market rates:

  • The accounting treatment
  • The tax treatment
  • Assumptions
  • Intercompany loan - accounting period beginning before 1 January 2016
  • Intercompany loan - accounting period beginning on/after 1 January 2016
  • Complicating factors

Loans from individuals:

  • The accounting treatment
  • The tax treatment
  • Assumptions
  • Loan made in accounting periods beginning before 1 January 2016
  • Loans made in accounting periods beginning on/after 1 January 2016
About the authors - Androulla Soteri

Androulla Soteri is national Tax Development Manager at MHA MacIntyre Hudson. Having qualified as an ACA with MacIntyre Hudson in 2005, she went on to become a lecturer at Kaplan Financial. After ten years at Kaplan, Androulla returned to MacIntyre Hudson in January 2016 where her role encompasses technical support, internal training, strategy and marketing, all from a tax perspective.

About the authors - Nicola Mandale

Nicola Mandale ACA CTA is a senior manager at Grant Thornton where she is the technical lead for corporate and international tax matters in their national tax team. She has more than 15 years’ experience of advising on corporate and international matters including transactions and reorganisations.

About the editor

Sharon Cooke FCA CTA is the London Director of SWAT UK Ltd and works closely with sister company Mercia. Both companies are part of Wilmington plc, a group specialising in turning knowledge into advantage. The Wilmington businesses enable professionals and their organisations to perform better by providing quality, relevant and reliable information, education and networking. Both SWAT UK and Mercia run extensive training programmes for accountants in practice, including CPD courses on the tax implications of new GAAP.

Join the Tax Faculty

The Tax Faculty offers expert guidance and support enabling you to provide the best advice on tax legislation to your clients or business. We offer clear direction in taxing times.

TAXguide 09/17

Tax Faculty members and ICAEW members can download this guidance in full.

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