Income Tax Act 2007 section 392

Loan to buy interest in close company etc.

Section 392 sets out when interest on a loan taken out by an individual to acquire shares in, or lend money to, a close company qualifies for tax relief.

• Interest relief is available on loans used to buy ordinary shares in a qualifying close company, to lend money to such a company for its trade, or to refinance an earlier qualifying loan
• The close company must not be a close investment-holding company, and any money lent to the company must be used wholly and exclusively for its business or that of an associated close company
• Relief is denied if the individual (or their spouse or civil partner) claims Enterprise Investment Scheme relief or Social Investment Tax Relief on the same shares or investment
• The section does not apply where the underlying business is the occupation of commercial woodlands