Part 8Other reliefs

F1CHAPTER 1AIrrecoverable peer-to-peer loans

Interpretation

412IMeaning of “loan”, “peer-to-peer loan” and related terms

(1)

This section applies for the purposes of this Chapter.

(2)

“Loan” means a loan of money which—

(a)

is made on genuine commercial terms, and

(b)

is not part of a scheme or arrangement the main purpose or one of the main purposes of which is to obtain a tax advantage (within the meaning given by section 208 of the FA 2013).

(3)

A loan is a “peer-to-peer loan” only if it meets—

(a)

Condition A or B, and

(b)

Condition C.

(4)

Condition A is that the person who made the loan is—

(a)

an individual,

(b)

a partnership which consists of—

(i)

two or three persons, and

(ii)

at least one person who is not a body corporate, or

(c)

an unincorporated body of persons which—

(i)

is not a partnership, and

(ii)

consists of at least one person who is not a body corporate.

(5)

Condition B is that—

(a)

the recipient of the loan is a person within paragraph (a), (b) or (c) of subsection (4), and

(b)

the loan is a personal or small loan.

(6)

Condition C is that, assuming interest were paid on the loan, the person who made the loan would (except for this Chapter) be liable for income tax charged on the interest.

(7)

“Personal loan” means a loan which is not used wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by the recipient of the loan.

(8)

“Small loan” means a loan of £25,000 or less.