CT600 Box 240: Non-Trade Loan Relationship Deficits

Box 240 on the CT600 is for non-trade loan relationship deficits. This applies when your company has borrowing costs or interest payments that exceed non-trading loan income.

What Goes in Box 240?

Box 240 captures deficits from loan relationships that aren't part of your trade. This typically involves:

Interest paid on non-trade borrowings
Losses on non-trade debt investments
Costs of managing investment loans

Most small trading companies have zero in Box 240 - their loans are usually for trade purposes.

Understanding Loan Relationships

What Is a Loan Relationship?

A loan relationship exists when your company:

Borrows money (debtor relationship)
Lends money (creditor relationship)
Has money relationships like bonds or debentures

Trade vs Non-Trade

Type	Examples	Tax Treatment
Trade	Overdraft for working capital, loan to buy stock	Part of trading profits
Non-Trade	Loan to buy investment property, personal lending	Separate treatment

When Box 240 Applies

Creating a Non-Trade Deficit

A deficit arises when:

``` Interest/costs paid on non-trade loans > Interest received on non-trade investments ```

Example Scenarios

Scenario 1: Investment Property Loan

Interest paid on investment property mortgage: £15,000
No non-trade interest received
Non-trade deficit: £15,000 → Box 240

Scenario 2: Mixed Position

Interest paid on investment loans: £20,000
Interest received on company savings: £5,000
Non-trade deficit: £15,000 → Box 240

Scenario 3: Net Credit

Interest received: £10,000
Interest paid: £3,000
No deficit (net profit of £7,000 goes elsewhere)

How Non-Trade Deficits Are Used

Relief Options

Non-trade deficits can be:

Set against current year profits (all types)
Carried back to previous periods
Carried forward to future non-trade profits
Surrendered as group relief

Order of Set Off

When claiming relief:

First against any non-trade credits in the same period
Then against other profits if claimed
Any remainder carries forward

Calculating Box 240

Step-by-Step

Identify all non-trade loan relationships
Calculate debits (interest paid, costs)
Calculate credits (interest received)
If debits exceed credits = deficit
Enter deficit amount in Box 240

Worked Example

Item	Amount
Interest on investment property loan	£18,000
Loan arrangement fees (capital)	£2,000
Interest on company savings	(£1,500)
Non-trade deficit	£18,500

Box 240 = £18,500

Trade Loans vs Non-Trade Loans

Trade Loan Characteristics

Borrowing for trading purposes
Working capital facilities
Equipment finance for trade use
Stock purchasing loans

These don't create Box 240 entries - they're part of Box 165.

Non-Trade Loan Characteristics

Investment property mortgages
Loans to acquire shares
Personal loans to directors
Investment borrowings

Box	Description
235	Total profits
240	Non-trade loan deficits (this box)
245	UK property business losses
250	Management expenses

Interaction with Property Income

For buy-to-let companies:

Property income goes in Box 190
Mortgage interest may be non-trade
Deficit in Box 240 can offset Box 190

Example:

Property income (Box 190): £25,000
Non-trade deficit (Box 240): £10,000
Net taxable: £15,000

Most Small Companies: Box 240 = Zero

Typical small trading companies:

Have trade-related borrowings only
Bank overdrafts are for trading
Any loans are to fund the business
No investment property financing

If all your borrowing is for trade purposes, Box 240 will be zero.

Common Questions

My company has a bank overdraft - does interest go in Box 240?

Usually no. If the overdraft funds your trading activities, the interest is a trading expense (reduces Box 165), not a Box 240 item.

We have a buy-to-let property - where does mortgage interest go?

Mortgage interest on investment property typically creates a non-trade loan relationship:

Interest paid → Non-trade debit
If exceeds non-trade credits → Box 240 deficit

Can I choose whether a loan is trade or non-trade?

No. It depends on the purpose:

Loan to buy trading equipment = trade
Loan to buy investment property = non-trade
The facts determine the classification

What about interest on director loans?

Interest paid on loans from directors:

Usually trade if used for trade
May be non-trade if used for investments
Check the purpose of the borrowed funds

When Using TinyTax

TinyTax handles loan relationship calculations:

Identify the purpose of each loan
Trade loans: included in trading expenses
Non-trade loans: separate calculation
Any deficit flows to Box 240

Most TinyTax users have only trade-related borrowings and won't need Box 240.

Need Help?

TinyTax guides you through loan relationship entries. For complex financing arrangements involving non-trade borrowings, consider consulting a tax specialist.

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