The group ratio method is an optional method of limiting the deduction available under the corporate interest restriction (CIR) rules. It is only available by election. For a general overview of the regime, see the Corporate interest restriction ― overview guidance note, and for details of the default fixed ratio method, see the Corporate interest restriction ― fixed ratio method guidance note.

Where a group’s net tax-interest expense in a period of account would exceed the maximum interest capacity given by the fixed ratio method, a group may elect to calculate its basic interest allowance using the group ratio method instead. The group ratio method will generally only be beneficial to groups whose gearing worldwide is higher than the gearing of the companies subject to corporation tax in the UK.

As with the fixed ratio method, the group ratio method restricts the deductibility of interest based on the lower of two figures. These are:

1. •

   a proportion (the group ratio percentage (GRP)) of the aggregate tax-EBITDA of the companies in the CIR worldwide