Corporation Tax Act 2010 section 778

Certain payments treated as interest

Section 778 requires that certain annual payments made under loan or credit transactions, which are not technically interest, must be treated as interest for corporation tax purposes.

• Where a loan or credit transaction provides for a payment that is not interest but takes the form of an annuity or other annual payment, it may be caught by this section.
• The section applies if the payment is an annuity or annual payment chargeable to income tax under Part 5 of ITTOIA 2005, provided it is not relevant foreign income.
• It also applies if the payment is an annuity or annual payment from a UK source chargeable to corporation tax under the rules for annual payments not otherwise charged, or under regulation 15 of the Unauthorised Unit Trusts (Tax) Regulations 2013.
• Any payment falling within these categories must be treated as a payment of interest for all purposes of the Corporation Tax Acts.