The move follows an earlier consultation on the topic, and will apply to qualifying loans or advances that are made on or after 25 November 2015. The measure exempts loans or advances made by close companies to trustees of charities for charitable purposes from the tax charge applied under the loans to participators rules.

In its policy outline, HMRC says the introduction of new anti-avoidance rules in 2013, followed by a consultation on whether to reform the loans to participator rules more widely, raised awareness of the application of these rules to charities.

The government agreed that some of the transactions being caught did not fit the policy rationale of the rules (because the funds could not end up in the hands of individuals for their personal use). Also, the particular way some charities have to structure can give rise to a loans to participator charge in circumstances which would not likewise be caught in a non-charity corporate group, creating an unlevel playing field.

The new rules are designed to provide a targeted exemption and reduce the administrative burden for charities and apply to loans or advances made on or after 25 November 2015.

Charities may refrain from accounting for any section 455 charge which could arise between this date and Royal Assent to Finance Bill 2016.

However, if the exemption is not ultimately approved by Parliament then charities will be liable to the section 455 charge according to the current law.

Legislation will be introduced in Finance Bill 2016 to create an exception from the section 455 charge. This will apply to some loans or advances made by close companies to trustees (corporate or individual) of charitable trusts which are currently liable to pay the tax charge because those trustees are participators or associates of participators in the close company. The exemption will apply where such a trustee receives a loan or advance, and it is applied wholly to the purposes of the charitable trust. Section 455 will continue to apply to charities where loans or advances are made in any other relevant circumstances as will the charge to tax: other arrangements in section 464A.

David Kilshaw tax partner at EY said: 'Although largely a technical change, charities will welcome this relaxation in the rules which tax advisers have been asking for since 2013.

'The devil will of course be in the detail and we will need to look carefully at the new rules to be sure that no charities remain trapped in a net that was never designed to catch them.'

In addition, the autumn statement also contained the announcement that the government intends to review the gift aid small donations scheme to ensure that it is operating as effectively as possible. A call for evidence will be published in December 2015.

HMRC’s policy paper is here