The debt cap—tested expense, available and tested income amounts [Archived]
The debt cap—tested expense, available and tested income amounts [Archived]

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

  • The debt cap—tested expense, available and tested income amounts [Archived]
  • The debt cap
  • Tested expense amount (TEA)
  • Net financing deductions (NFD)
  • Election to disapply rule treating negative or small NFD (or NFI) as being nil
  • Tax and accounting mismatches
  • Excluded relevant amounts
  • Available amount (AA)
  • Amounts excluded from the available amount
  • Tested income amount (TIA)
  • More...

The debt cap—tested expense, available and tested income amounts [Archived]

ARCHIVED: This Practice Note has been archived and is not maintained.

With effect from 1 April 2017, the worldwide debt cap rules have been repealed and replaced by the corporate interest restriction (CIR) rules. The worldwide debt cap rules outlined in this Practice Note should therefore only apply to periods prior to 1 April 2017, the date that the CIR rules came into force. In respect of any periods straddling that date, the debt cap rules should apply to the notional period ending on 31 March 2017. For more information on the CIR, which replaces and repeals the debt cap rules, see Practice Note: Corporate interest restriction.

Tax relief for the financing expenses of UK resident companies which are member of large groups may be restricted (ie disallowed) where, broadly, the amount of the group's net debt based in the UK exceeds 75% of the group's gross debt (known as the gateway test).

The debt cap applies to periods of account commencing on or after 1 January 2010.

The provisions that achieve the restriction are often referred to as the worldwide debt cap regime (although it is possible that the regime will apply to a group comprised of UK companies only). The regime was introduced alongside the distribution exemption rules in order to protect the UK tax base.

The

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