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CG65991 | Losses: loans to traders: payments under guarantee: general

From HM Revenue & Customs · Capital Gains Manual

TCGA92/S253 (4) provides relief for certain payments made by guarantors of qualifying loans to traders, where the payments are made under the guarantee in consequence of the loan having been irrecoverable from the borrower. The loan must have been

  • of money

  • used wholly for the purposes of the borrower's trade, (trade includes profession or vocation for these purposes) which does not consist of or include the lending of money

or

  • used for the purposes of setting up the trade, provided the trade is actually carried on subsequently

  • made to a borrower resident in the UK.

Relief is available, where the conditions are met, in respect of payments made under guarantees which were given on or after 12 April 1978. It does not matter when the loan itself was made. Unlike TCGA92/S253 (3), relief can be given for payments in respect either of outstanding principal of the loan, or of interest in respect of it.