Section 412I — Income Tax Act 2007: Meaning of “loan”, “peer-to-peer loan” and related terms

Meaning of “loan”, “peer-to-peer loan” and related terms 412I 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.