Introduction Amendments to section 455 CTA10
4.Paragraph 3 amends section 455 of CTA10. Broadly, under that section, if a close company makes a loan or advance of money to a relevant person (i.e. an individual or a company acting in a fiduciary or representative capacity) then there is a tax charge (known as “section 455 tax”) of 25 per cent of the amount of the loan or advance.
5.In addition to the charge on loans or advances to relevant persons, the amended section 455 puts beyond doubt that loans and advances to certain trustees and certain limited liability partnerships (LLPs) or other partnerships are subject to the section 455 tax, as follows:
Example 1:
	An individual (X) owns 100% of the shares – and is therefore a participator - in a close company (C Ltd).
	X and C Ltd set up an LLP with themselves as the partners.
	C Ltd makes a loan to the LLP.
A close company, C Ltd, has made a loan to an LLP in which there is an individual partner who is also a participator in the close company, so the loan is chargeable to section 455 tax on the close company (unless one of the exceptions in sections 456 or 461 CTA 2010 applies).
6.As announced by the Government on 20 March 2013, the amendments to section 455 CTA10 have effect from that date.