Income Tax Act 2007 section 564M

Treatment of alternative finance return as interest for ITTOIA 2005

Section 564M ensures that alternative finance return is treated as interest for all purposes of the Income Tax (Trading and Other Income) Act 2005, so that it is taxed and relieved in the same way as conventional interest.

• Alternative finance return is treated as interest for all purposes of ITTOIA 2005
• This means the same tax charges and reliefs that apply to interest also apply to alternative finance return
• References to interest in the funding bonds rules (section 380 of ITTOIA 2005) specifically include alternative finance return
• The effect is to place Sharia-compliant and other alternative finance arrangements on an equal footing with conventional lending arrangements