RPSM07103030 - Technical Pages: Investments: Loans: Guarantees

Guarantees

Where a registered pension scheme makes a guarantee of a loan, it is considered to be taking the same risk in economic terms as lending the money directly. For this reason any guarantee made by the scheme to

• a person who is, or has been, a sponsoring employer or
• a person who is, or has been, a member of the scheme, or
• a person who is connected to the person who is, or has been, a sponsoring employer or member,

will be treated as a loan and will be subject to the corresponding restrictions set out at RPSM07103050 onwards.

The amount of the loan will be equal to the amount guaranteed by the scheme.

Where a scheme guarantees a loan for any person mentioned above, the amount guaranteed will be taxed as if it were a loan - see RPSM07108010.

For these purposes, “connected party” is defined in section 839 of the Income and Corporation Taxes Act 1988 (ICTA) - see RPSM07103180.