The debt cap—worldwide groups, the gateway test and the financial services group exclusion [Archived]
The debt cap—worldwide groups, the gateway test and the financial services group exclusion [Archived]

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

  • The debt cap—worldwide groups, the gateway test and the financial services group exclusion [Archived]
  • Purpose of the debt cap rules
  • Worldwide groups
  • What is a group?
  • Ultimate parent
  • What is a large group?
  • What is a relevant group company (RGC)?
  • Relevant subsidiary of the ultimate parent
  • Qualifying financial services groups exclusion
  • UK trading income
  • More...

The debt cap—worldwide groups, the gateway test and the financial services group exclusion [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ARCHIVED: This Practice Note has been archived and is not maintained.

With effect from 1 April 2017, the worldwide debt cap rules have been repealed and replaced by the corporate interest restriction (CIR) rules.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.

The worldwide debt cap rules (also referred to as the debt cap or WWDC or the main debt cap rules):

  1. compare (on an objective basis) the net borrowing costs of the UK part of a group (referred to as the tested expense amount or TEA) with the gross borrowing costs of the group as a whole (referred to as the available amount or AA), and

  2. where the TEA (the UK net borrowing cost) exceeds the AA (the group's gross borrowing costs), disallow the excess (although, where UK borrowing costs are disallowed, net financing costs may be exempted from UK tax, subject to a cap of the

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