Corporate interest restriction ― frequently asked questions

Produced by a Tolley Corporation Tax expert

Corporation Tax

Guidance

The following scenarios are intended to illustrate how the corporate interest restriction (CIR) will apply in a variety of real-world situations. The scenarios are intended to be more complex than the most simple situations but not uncommon.

For a general overview of the regime, see the Corporate interest restriction ― overview guidance note.

How does the CIR apply if a company’s accounting periods (APs) do not align with the period of account (PoA)?

Most of the computations and allocations required by the CIR are carried out by reference to a group’s PoA. UK corporation tax, however, operates by reference to APs of individual companies, which do not necessarily align with the periods for which a group draws up consolidated financial statements. The term used to describe an AP of any group company that falls wholly or partly within a given PoA is a relevant AP.

Where a UK group company’s APs exactly align with the periods for which its group draws up financial statements, that company will have only one relevant AP and it will

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