The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
The corporate interest restriction (CIR) essentially limits the amount of interest expense a company can deduct from its taxable profits if the interest expense is over £2 million. The actual mechanics of the CIR calculation are highly complex (the legislation is over 150 pages long) and are detailed below.
Before looking at the detail of the rules, it is important to note that there are a few points that are specific to the CIR regime, as follows:
the rules operate in relation to the worldwide group and by reference to the period of account (PoA) of the group for which the consolidated financial statements are prepared. A worldwide group usually refers to an ultimate parent and each of its consolidated subsidiaries, although it is possible to have a single-company worldwide group
the CIR works on a group rather than a company-by-company basis which is different to most taxing provisions. What this means is that most calculations required by the rules are carried out at the group level with any interest restrictions etc being made afterwards to individual companies
The CIR applies to ‘tax interest expense’. This is the legislative phrase used to encompass a wide range of interest and interest-like transactions such as:
most loan relationship debits
some derivative contract debits
the finance cost element of certain arrangements or transactions involving finance leasing, debt factoring or service concession arrangements
TIOPA 2010, s 382
For simplicity, when the word interest is used in this guidance note, it includes these transactions.
See Simon’s Taxes D1.14 for a comprehensive discussion of all aspects of the regime.
Very broadly, the restriction applies to worldwide groups with an aggregate UK net tax-interest expense in excess of £2 million. The interest expense is the amount based on the consolidated P&L after it has been adjusted to align it more closely with UK tax principles. The £2 million threshold is adjusted on a pro rata basis for periods of account (PoA) of
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
The majority of state benefits (also called social security benefits) are managed by the Department of Work and Pensions (DWP) via the Jobcentre Plus.Some benefits are dependent on a national insurance contribution record (and different classes of national insurance provide different benefit
This guidance note considers the capital gains tax implications where shares are sold in exchange for new shares.The consideration paid by a purchasing company to the shareholder(s) for their shares in a target company could be in the form of either:•new shares in the vendor in exchange for shares
This guidance note provides an overview of what conditions need to be met before a business is entitled to treat VAT incurred as input tax. This note should be read in conjunction with the other notes in the ‘Claiming input tax’ subtopic. For a flowchart outlining the procedure for claiming input
Class 1 and Class 1AClass 1 and Class 1A are the categories of NIC that can be charged on expenses reimbursed and benefits provided to employees. These classes are mutually exclusive. A benefit cannot be subject to both Class 1 and Class 1A NIC. Three requirements must be met before Class 1A NIC is
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.