Commentary

E1.820 Qualifying loan interest—general restrictions and method of granting relief

Personal and employment tax

E1.820 Qualifying loan interest—general restrictions and method of granting relief

Relief for qualifying loan interest paid by individuals and personal representatives

E1.820 Qualifying loan interest—general restrictions and method of granting relief

Introduction

The relief for interest payment rules allow a deduction to be made from an individual's total income for the amount of interest paid on a qualifying loan1.

Relief is available for interest paid on the following loans:

  1.  

    (a)     loans to buy plant or machinery for partnership use taken out by an individual (see E1.826)2

  2.  

    (b)     loans to buy plant or machinery for employment use taken out by an individual (see E1.826)3

  3.  

    (c)     loans to buy an interest in a close company taken out by an individual (see E1.827)4

  4.  

    (d)     loans to buy an interest in an employee-controlled company taken out by an individual (see E1.827A)5

  5.  

    (e)     loans to invest in a partnership taken out by an individual (see E1.827B)6

  6.  

    (f)     loans to invest in a co-operative taken out by an individual (see E1.828)7

  7.  

    (g)     loans to pay inheritance tax taken out by personal representatives (see E1.830A)8

Relief also continues to be available in respect of loans for the purchase of life annuities made before 9 March 1999 or made pursuant to an offer before that date9.

The relief has to be claimed10. The time limit is four years after the tax year to which it relates11. For details of the method of relief, see 'Method of granting relief' below.

Qualifying loan interest is included in the cap on income tax reliefs that applies an overall limit on the amount of relief

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