ÀÏ˾»úÎçÒ¹¸£Àû

Interest payments

The tax treatment of financing expenditure for companies is determined by the loan relationship rules. These are covered in more detail in the Corporate debt ― overview guidance note.

For unincorporated businesses, statutory provisions exist which treat interest expenses as revenue. As a consequence, there is no need to consider whether interest payments are capital in nature.

It should be noted that no deduction is allowed for the repayment of the capital part of the loan itself.

Provided a loan is arranged for business purposes and meets the ‘wholly or exclusively’ test, interest payments arising from the loan will be allowable expenses for tax purposes. See the Wholly and exclusively guidance note for general considerations of this principle.

Details of the treatment of interest paid by partnerships can be found in the Trading profits of a partnership guidance note.