Income Tax Act 2007 sections 91–94

Interest: loans for interests in close companies

Sections 91–94 provide transitional rules that modify the conditions for obtaining income tax relief on interest paid on loans used to acquire interests in close companies, depending on when shares were acquired or loans were made.

• The restriction in section 392(3)(a) does not apply to shares acquired before 14 March 1989, and the restriction in section 392(3)(b) does not apply to shares acquired before 6 April 1989.
• For loans made before 14 November 1986, the definition of "associate" in section 395 is widened so that any person interested in a trust or estate (other than the individual themselves) counts, rather than only trustees or personal representatives.
• An individual is not treated as an associate under the wider pre-November 1986 rule where the trust relates solely to a registered pension scheme, or where the trust is exclusively for the benefit of employees or their dependants and the individual holds no more than 5% of ordinary share capital.
• Section 395(2), which deals with employee benefit trusts, does not apply to loans made before 26 July 1989, and for loans made on or after that date the relevant definition of employee benefit trust uses 26 July 1989 as its reference date rather than 13 March 1989.