Guidance

Reclaim tax paid by close companies on loans to participators (L2P)

If you're a close company or a tax agent, find out how to claim relief for loans that have been repaid, released, or written off.

Close companies can make loans to individuals who have a share or interest in their companies (participators). A tax charge applies if the loans are still outstanding more than 9 months after the end of the accounting period in which the loans were made.

Who can claim relief

If you’re a close company and loans you’ve made to participators have been repaid, released, or written off, you can claim relief on tax paid.

Tax agents working on behalf of clients can also claim.

When you can claim

You cannot claim relief until 9 months and 1 day after the end of the Corporation Tax accounting period in which the loan was repaid, written off or released. You will not be repaid before this.

Before you start

You’ll need to have this information to hand. You’ll need your:

You’ll also need the:

  • start and end dates of the accounting period when the loan was made
  • date the loan was made
  • start and end dates of the accounting period when the loan or part loan was repaid, released or written off
  • date the loan or part loan was repaid, released or written off
  • value of the loan or part loan repaid, released or written off
  • date when relief is due

If you’re an agent

You’ll need an agent services account to apply for relief. If you do not have one you’ll need to do the following:

  1. Register to use an agent services account.
  2. Create your agent services account.

If you’re asked to create an agent services account but you have already registered for one, you should check you have:

  • signed in with the same government gateway ID and password you use to access your agent services account
  • not signed in with credentials for your HMRC online services for agents account
  • tried using a different web browser

Claim online

To use the online service, you need a Government Gateway user ID and password. If you do not have a user ID you can create one when you use the service.

Agents

Use the same government gateway ID and password you use to access your agent services account.

Claim now

What happens next

If you’re entitled to relief we will send you a revised tax calculation and pay you what you’re owed.

If you’re not entitled to a refund we’ll write and explain the reason why.

Published 6 November 2023