Key UK tax issues when raising new debt, or restructuring existing debt

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An important area of focus for businesses – especially given the unprecedented challenges posed by the COVID-19 lockdown – will be maintaining or improving cashflow, especially in the short term. Those businesses with substantial real estate may look at sale and leaseback transactions. But, for many, debt finance will be the obvious way to achieve this – for example, by raising new debt or renegotiating with existing lenders to capitalise interest by issuing shares, or seeking modified terms (deferring interest for example), or the release or transfer of the debt.

This note outlines the key UK tax issues to consider for each of these debt options from the perspective of a corporate borrower that is a UK corporation tax payer (i.e. UK tax resident or trading through a permanent establishment in the UK or, from April 2020, carrying on a UK property business).

For more information or guidance on this topic, please contact Richard Woolich, David Thompson
or Jesse Dalton. You can view more resources on our UK Up Again site.