Introduction Summary
1.Section 42 amends the legislation in Corporation Tax Act 2009 (CTA) on the loan relationships of companies. It ensures that where a company is released from a debt that it has incurred in the course of a trade or property business, the debt release is taxed under the rules for loan relationships rather than those for trading or property income. This means that if the debtor company is connected with the creditor (for example, if they are two companies in the same group), no tax charge arises on the debtor and there is no tax relief for the creditor. The change applies to debt releases occurring on or after 22 April 2009.