Income Tax Act 2007 section 394

Meaning of "material interest" in section 393

Section 394 defines what counts as a "material interest" in a company for the purposes of determining whether an individual qualifies for tax relief on loan interest under section 393.

• An individual has a material interest if they, together with associates, or any associate alone or with others, beneficially own or control more than 5% of the company's ordinary share capital
• A material interest also exists if the relevant person holds rights entitling them to receive more than 5% of the company's assets on a winding up or in other circumstances
• The test looks not just at the individual personally but extends to associates and combinations of the individual with associates
• The concepts of "control" and "participator" follow the close company definitions in the Corporation Tax Act 2010