In April 2017 the Tax Faculty published TAXguide 09/17 FRS 102: loans at non-market rates which covers the tax implications of non-market rate loans made to a company following the introduction of FRS 102.
If this is a topic of interest to you why not join us for our webinar on Tuesday 22 August (or listen to the recording later)? see details below.
The rules for non-market rate loans are complicated, but in summary, where a loan is made from one company (or a director-shareholder) to another company at a non-market rate of interest the loan must be recorded at amortised cost rather than transaction price. The resulting debits and credits must be considered when preparing the tax computation and the tax treatment will depend on when the loan was made and whether the individual making the loan is a director or director-shareholder.
The TAXguide has now been updated to reflect an amendment to FRS 102 issued by the Financial Reporting Council. The amendment, which has immediate effect and can be retrospectively applied, states that small entities do not need to adopt the usual FRS 102 accounting treatment for non-market rate loans in certain circumstances. These circumstances are where the loan is from (but not to) a director who is a natural person and a shareholder in the small entity (or a close family member of that person). As the small entity accounts will not be adjusted in these circumstances there will be no tax implications arising.
FRS 102 introduces many other accounting changes all with their own tax consequences. On 22 August at 11:00, Sharon Cooke, London Director of SWAT, is presenting a practical and informative webinar on this topic, considering not only non-market rate loans but also the impact on holiday pay accruals, intangible fixed assets, and investment properties.
This webinar is free to Tax Faculty and Financial Reporting Faculty members, and Faculties Online subscribers. If you miss the webinar, you will be able to listen to the recording once it is posted on our website.
We also run other events and webinars which will be of interest to members and which are free to members of the Tax Faculty. You do not have to be an ICAEW member to join the Tax Faculty.
Visit the ICAEW.com website to see the full list of our events in 2017.