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Use the Loan relationships template to analyse the company's loan relationship debits and credits — broadly, interest and other returns on money debts — and determine how much is taxable or deductible for corporation tax. For each item you say whether it is a trading or non-trading loan relationship and choose its tax treatment, and the template tracks the balances and the income tax suffered or deducted.

Table of contents 

When should I use this template?

Use it where the company has interest income or expense, or other amounts arising from loan relationships, recognised in the accounts — for example bank interest received, or interest payable on loans.

Before you start

A business type must be selected in the Business type section of the Return information template. If none is selected, the template shows a warning and cannot calculate.

If a single loan relationship item has more than one tax treatment, enter it on more than one row — a row for each tax treatment — so each part is analysed correctly.

Working through each loan relationship

For each item you complete:

  • Description — the item.
  • Trade / Non-trade — a dropdown that classifies the loan relationship. Trading loan relationship debits/credits form part of the trade result; non-trading ones (the more common case, such as bank interest) go to the non-trading loan relationship pool. For an investment business, only Non-trade is available.
  • Balance b/f — any brought-forward balance (for example an amount taxable or deductible in a later period), entered or rolled forward.
  • P&L / OCI (charge) / credit — the amount recognised in the accounts for the period.
  • Tax treatment— a dropdown that determines how the amount is treated:
    • Taxable / (Deductible) — taxable or deductible in the period;
    • Not taxable / (Not deductible) — excluded from the computation; or
    • Taxable / (Deductible) later — carried forward to be taxable or deductible in a later period (this drives the balance carried forward).
  • Balance c/f — the amount taxable or deductible in a later period, carried forward.
  • Income tax (suffered) / deducted — income tax suffered on receipts or deducted on payments.

The template reconciles the amounts recognised against the loan relationships analysed in the P&L / OCI analysis and flags any difference.

What flows through to the rest of Corporation Tax?

  • The taxable / (deductible) amount flows into the computation for the period (into the trade result or the non-trading loan relationship pool depending on the Trade/Non-trade classification).
  • The balance c/f carries forward amounts taxable or deductible in a later period.
  • Income tax suffered / deducted feeds the tax calculation, where income tax suffered can be set against the corporation tax liability.

What rolls forward next year?

The balance c/f for each item becomes next year's balance b/f, so amounts taxable or deductible in a later period are picked up when they fall due. Current-period charge and analysis fields clear for the new year.

Frequently asked questions

What does the Trade / Non-trade dropdown do?

It classifies the loan relationship. Non-trading credits and debits (for example bank interest) are pooled separately from trading loan relationships, which form part of the trade result. For an investment business only Non-trade is offered.

An item has more than one tax treatment — how do I enter it?

Use a separate row for each tax treatment.

What is the "Taxable / (Deductible) later" treatment for?

For amounts recognised now but taxable or deductible in a later period; selecting it carries the amount to the balance c/f rather than into the current computation.

What is the income tax suffered column for?

It records income tax suffered on receipts (or deducted on payments); income tax suffered can be set against the company's corporation tax liability in the tax calculation.

Where the data comes from

  • The amounts are entered here (or brought forward from last year); the template reconciles them against the loan relationships analysed in the Profit and loss / OCI template.
  • Loan relationship transfer pricing adjustments are pulled from the Transfer pricing template.
  • The business type comes from Return information, and period/rate information from Rates and allowances.
  • The income tax suffered / deducted feeds the Tax calculation (set against the corporation tax liability).