Income Tax Act 2007 section 398

Loan to invest in partnership

Section 398 sets out the qualifying uses of a loan to an individual that may entitle the borrower to tax relief on the interest paid, where the loan is used to invest in a partnership.

• A loan to an individual qualifies if it is used to purchase a share in a partnership, contribute capital or a premium to a partnership, or advance money to a partnership — provided the funds are used wholly for the partnership's trade or profession.
• A loan used to repay another loan that itself qualified under this section also qualifies, ensuring refinancing does not disrupt the relief.
• This section covers the qualifying uses of the loan; separate conditions relating to the individual's circumstances at the time interest is paid are dealt with elsewhere (section 399).
• Relief under this section is not available where the partnership's business is the occupation of commercial woodlands, as excluded by section 411.