Section 384 General restrictions on relief under Chapter
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(1) Relief is not to be given under this Chapter for interest on a debt incurred—
(a) by overdrawing an account, or
(b) by debiting the account of any person as the holder of a credit card or under similar arrangements.
(2) If [the interest paid on a loan in a tax year exceeds a reasonable commercial amount of interest on the loan for the relevant period]1, relief is not to be given under this Chapter for so much of the interest as represents the excess.
Amendments
1 Substituted by Finance Act 2008 section 62 and Schedule 22 para 21(2) in relation to interest paid on or after 9 October 2007, but in relation to interest paid in the period beginning with that date and ending with 5 April 2008, the substitution has effect as if the references in (2) and (3) to a tax year were to that period.
(3) The relevant period is the tax year or, if the loan exists for part only of the tax year, the part of the tax year for which the loan exists.
Amendments
Subs (3) inserted by Finance Act 2008 section 62 and Schedule 22 para 21(3) in relation to interest paid on or after 9 October 2007, but in relation to interest paid in the period beginning with that date and ending with 5 April 2008, the substitution has effect as if the references in (2) and (3) to a tax year were to that period.
(4) A reasonable commercial amount of interest on the loan for the relevant period is an amount which, together with any interest paid before that period (other than unrelieved interest), represents a reasonable commercial rate of interest on the loan from the date it was made to the end of that period.
Amendments
Subs (4) inserted by Finance Act 2008 section 62 and Schedule 22 para 21(3) in relation to interest paid on or after 9 October 2007, but in relation to interest paid in the period beginning with that date and ending with 5 April 2008, the substitution has effect as if the references in (2) and (3) to a tax year were to that period.
(5) “Unrelieved interest” means interest which because of subsection (2) is not eligible for relief under this Chapter.
Amendments
Subs (5) inserted by Finance Act 2008 section 62 and Schedule 22 para 21(3) in relation to interest paid on or after 9 October 2007, but in relation to interest paid in the period beginning with that date and ending with 5 April 2008, the substitution has effect as if the references in (2) and (3) to a tax year were to that period.
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