Currently, when company directors or participators have loans outstanding for more than 9 months after the accounting period in which they were taken out, a 25% tax charge is payable by the company.
This 25% charge is repayable but only 9 months after the accounting period in which the loan is repaid and it requires the taxpayer to write to HMRC.
HMRC have been consulting over whether to change these rules in a further attempt to tackle tax avoidance.
However, the Government has listened to industry campaigners and has now confirmed that there will be no fundamental reforms at this stage. They will instead consider targeting the existing rules more effectively. Unfortunately this may include introducing a differential / higher rate!