Income Tax Act 2007 section 390

Loan to buy plant or machinery for employment use

Section 390 sets out the conditions under which tax relief on loan interest is available where an individual borrows money to buy plant or machinery for use in their employment or office.

• The loan must be used for capital expenditure on plant or machinery that is in use for the purposes of the individual's employment or office during the tax year.
• The plant or machinery must belong to the individual, and the individual must be entitled to a capital allowance or liable to a balancing charge in respect of it for that tax year.
• If the individual was entitled to a capital allowance or liable to a balancing charge in a previous year and no disposal value has been brought into account, they are treated as still meeting the capital allowances condition in the current year.
• Where the individual's employer has made a contribution towards the cost that would otherwise deny capital allowances, the individual is still treated as meeting the capital allowances condition for the purposes of this relief.

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