Corporate interest restriction
Corporate interest restriction

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Corporate interest restriction
  • Background
  • High-level summary of the rules
  • What is the corporate interest restriction (CIR)?
  • How does it work?
  • What is its impact?
  • Key concepts and principles
  • 'Interest' includes certain other payments
  • The rules operate on a worldwide group basis
  • The rules operate by reference to periods of account
  • More...

FORTHCOMING CHANGE: Finance Bill 2020–2021 will contain two technical amendments to the CIR rules to ensure the regime works as intended. The first is a clarificatory amendment to the CIR provisions dealing with REITs to reflect the fact that since 6 April 2020 UK property businesses of non-resident companies are within the charge to UK corporation tax rather than income tax. The second ensures that no penalties arise for the late filing of an interest restriction return if there is a reasonable excuse for the failure. For more information, see News Analysis: Draft Finance Bill 2020–21—Tax analysis—Technical amendments to the CIR.

The rules comprising the corporate interest restriction are lengthy and complex. To assist the reader, this Practice Note starts with a background section and a short, high level summary of the rules. This is followed by a guide to some of the key concepts and principles that underpin the rules and a glossary of key definitions. The main operative provisions of the rules are then considered in more detail in the remaining sections of this Practice Note.

The order of contents is as follows:

  1. Background

  2. High-level summary of the rules

  3. Key concepts and principles

  4. Glossary of key definitions

  5. How the interest restriction is calculated and applied

  6. The fixed ratio method of calculating the interest restriction

  7. The group ratio method of calculating the

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