Income Tax Act 2007 section 95

Interest: loans for interests in employee-controlled companies

Section 95 provides transitional rules for interest relief on loans used before 6 April 1990 to acquire interests in employee-controlled companies, extending certain provisions to include spouses and setting conditions for successor loans made on or after that date.

• For loans used before 6 April 1990 to acquire interests in employee-controlled companies, the employee-control test is widened so that shares held by spouses of full-time employees count towards the employee-control threshold.
• Unless both the individual and their spouse are full-time employees of the company, any limit on the proportion of shares an individual may hold is extended to include shares held by the individual's spouse.
• The eligibility conditions in section 397 are similarly extended so that references to the individual also cover the individual's spouse.
• Where a replacement or successor loan was made on or after 6 April 1990, interest on it only qualifies for relief if interest on the original loan would have been allowable under the former ICTA rules after that date.